With all talk centered on China today given the stunning overnight sell-off in the Shanghai market which seems to be rippling over to U.S. markets, today we focus on a specific niche within the China equity space, that of “Real Estate.”
TAO (Guggenheim China Real Estate, Expense Ratio 0.71%) comes to mind although the fund itself does not have a substantial asset base even though it debuted way back in 2007 ($21.9 million in AUM).
The fund has actually held its own in spite of the carnage that has occurred in broad China equity benchmarks, for if we look at the year to date performance in TAO compared to say the largest China equity ETF FXI (iShares China Large Cap, Expense Ratio 0.74%) we see out-performance in the realm of more than 1000 basis points and is registering positive returns for the year.
In the trailing one month period, however, even TAO has lost some steam and is down nearly 4%, but compared to FXI’s >13% loss during the same time period, the grass certainly looks greener in its case.
TAO tracks the “AlphaShares China Real Estate Index” and according to fund literature “is designed to measure and monitor the performance of publicly issued common equity securities of publicly-traded companies and real estate investment trusts (“REITs”) which are open to foreign ownership and derive a majority of their revenues from real estate development, management, and/or ownership of property in China or the Special Administrative Regions of China such as Hong Kong and Macau.”