Claymore has launched an exchange traded fund (ETF) focused on China that gives exposure to the powerhouse country’s small-, mid- and large-cap companies, backed by an index Burton Malkiel helped create.
Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO) is the third China-focused ETF from Claymore. Claymore President Christian Magoon says the new fund is different in several ways:
- It gives diversified exposure to a range of asset classes in the country.
- There’s exposure to the growing consumer sector of the country. China has a rapidly rising standard of living, and there’s still a lot of room to grow. Consumer spending makes about about 37% of China’s GDP. (Read about the U.S. push into emerging markets).
- There’s also exposure to technology in the fund. China is one of the most dynamic technology countries.
- It helps tackle a problem of large-caps in China. Namely, many of them are state-run entities than tend to be operated in the best interests of China rather than the investor. The fund has 57% exposure to large-cap, 33% mid-cap and 10% small-cap. By having more mid- and small-cap exposure, Magoon says, “You get a lot more of the entrepreneurial power of China as a culture.”
- A range of sectors are represented: financial, technology, utilities, telecom, consumer. “It’s one-stop exposure to China,” Magoon says. (Read more about China’s economy).
- One of the most well-known names in investing was behind its creation. Burton Malkiel, chief investment officer of AlphaShares and Princeton University economist, helped create the index. “He’s done lots of research on China, his passion is China. We worked together and created this index,” Magoon says.
- It has limits. YAO has a 35% limit on sector exposure, and no component receives more than a 5% weighting.
- It has a variety of share types. YAO isn’t just composed of American Depository Receipts (ADRs). There are also Global Depository Receipts (GDRs) and H Shares. A and B shares have been excluded because of limits on foreign ownership.
YAO joins two other China ETFs already available: Claymore/AlphaShares China Small-Cap (NYSEArca: HAO) and Claymore/AlphaShares China Real Estate (NYSEArca: TAO). Claymore has also filed for other China-based ETFs aimed at the consumer, technology and infrastructure sectors. (Read more about China’s real estate).
“We really believe that people are continuing to evolve when they look at China and not seeing it as a place where there’s just one way to invest,” says Magoon.
Meanwhile, Claymore’s merger with Guggenheim closed on Thursday. Magoon says they’re looking forward to working with the institutional investor and leveraging their research. “For now, we’re just starting out on our journey. It’s really going to be a growth story.”
For more stories on new ETFs, visit our new ETF category.
Heather Hayes contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.