Chamois16

Index ETFs Have the Edge Over Actively Managed CEFs

Not a very persuasive argument. CEF pay out higher distributions, particularly country funds, and its not clear that that the comparisons are based on total returns. Finally comparisons can be made either on NAV basis or market price basis. You can't compare a CEF market price with an Index ETF NAV.

One of the advantages of CEF is the ability to exploit periodic excursions from equilibrium discounts common to each fund. That doesn't ccur with ETF subject to creation unit arbitrage, usually penalizing the ETF holder in favor of the arb. There are times in a market cycle in which index ETF outperform CEF and vice versa.

The article seems to be comparing an investment vehicle which is at best nascent (how many truly actively managed ETF are out there). with CEF which have been around for a long time and are particularly suited to sspecific asset classes.

You would do better to limit your comparison to index ETF vs actively managed ETF when sufficient data becomes available, and not try to deal with the vaery different attributes of CEF

Is China Headed for a 1929-Style Market Crash?

I have to agree that an article which suggests a world class market crash may be imminent and instead of saying why, focuses on the 19bp number v. some other, seems a waste of space. Why not at a miimum acknowledge that the deposit rate was rased more than the lending rate which, even though slight, is a small incentive to savings and a small squeeze on margins.

Why not discuss the heavy investments into infrastructure, such as nuclear power and railroad tracks, that will promote the conversion of an export economy to local consumption. The Shanghai and Shenzhen markets may be overbought, but not on the scale of 1929 and the earmarks of equivalent recession are missing.

US Investors Not Feeling the Chinese Stock Market Sizzle

Using YTD data for closed end funds can be quite misleading if CEF dynamics are not understood. These CEF paid out large cap gains distribution at yearend, causing the NAV to drop precipitously and putting the market prices ata momentary high premium. These conditions qickly corrected in the new yearand and market prices in January, reflecting the distribution went to more noraml discounts, Since that time, the performance ofmarket prices and NAV have more closely followed the indexes they represent.

More fundamentally, there is a major performance distinction between A&B share mainland markets and HK. CAF, as the example, marches to a different drummer than the other China CEF, even if that drummer may potentially be out of control.

As long as these PRC markets are growing rapidly, I think it is wrong to discount the utility of ETF and CEF as vehicles, CEF, for example, must recognize harvested capital gains through distribution, reducing future market risk associated with ownership.

Emerging Markets ETFs: Predictable and Consistent

Volatility, common to emerging markets, is not a reason to exclude individual securities, including ETF; longer term performance of all these funds you mention, with the possible exception of PGJ, which at best is a managed fund in drag, exceeds that of most developed markets. They had become overbought, but still represent long term value, particularly after correction

Excess volatility at the portfolio level is to be avoided since it represents risk, but a properly diversified portfolio will handle, and benefit from, emerging market stocks and index funds.

Get Ready for the Chinese Bubble to Burst

I don't believe the Shanghai and Shenzhen markets are the right metric for non PRC-resident investors in measuring bubbles or time lines. Most of us own H-shares and Red Chips traded in Hong Kong or as ADRs in NY. The market price correlations between mainland exchanges and those used by US retail investors do not correlate well, nor are the underlying fundamentals of companies listed each, the same.

One getrs an entirely different picture comparing corporate P/E and PEGs in markets catering to different investor groups. Certainly some good Chinese stocks became overbought, eg China Life, and are in the process of correcting, but to suggest that FXI and many of its components are in a bubble, without presenting rationale as to why, seems unfair.

Bad Time To Invest In Mainland China?

Most of us (non PRC) can't buy A shares anyway. Plenty of H shares trading NYSE as ADR and there's always the iShares FXI. I haven't seen any peruasive rationale that H-shares in general are overheated, given the current growth in the mainland economy. Some individual mainland companies are obviously overbought, but that's true in most any market