Chinese stocks are up over 30% since September 2011. That’s largely because investors believe that a global recovery will raise China’s exports and improve its domestic economy. As well, the country’s inflation rate is easing. That gives it more options to boost growth, including cutting interest rates. Here are two Chinese exchange traded funds (ETFs) that we cover in Canadian Wealth Advisor newsletter. One holds publicly traded Chinese stocks available to foreign investors, and the other holds small cap Chinese stocks. SPDR S&P CHINA ETF (New York Exchange symbol GXC) is an exchange traded fund that aims to track the S&P China BMI Index. This index is made up of all the publicly traded Chinese stocks that are available to foreign investors. Right now, the SPDR S&P China ETF holds 184 stocks. The $879.6-million fund’s top holdings are China Mobile, 7.7%; China Construction Bank, 7.5%; Baidu, 5.4%; Industrial & Commercial Bank, 5.1%; CNOOC, 4.6%; PetroChina, 4.2%; Tencent Holdings, 3.9%; Bank of China, 3.5%; China Life Insurance, 2.7%; and China Petroleum & Chemical, 2.6%. The fund’s breakdown by industry is as follows: Financials, 31.0%; Oil and Gas, 15.9%; Information Technology, 13.8%; Industrials, 10.2%; Telecommunication Services, 10.1%; Consumer Discretionary, 5.5%; Consumer Staples, 5.0%; Basic Materials, 4.4%; Utilities, 2.3%; and Health Care, 1.6%. The ETF was launched on March 19, 2007. It has a 0.59% MER, and yields 0.9%. [ofie_ad]
Exchange traded funds: Small cap fund aims to grow with maturing Chinese economy
GUGGENHEIM CHINA SMALL CAP ETF (New York Exchange symbol HAO) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.
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The $168.8-million fund’s top holdings are Alibaba.com, 1.7%; Zoomlion Heavy Industry, 1.3%; Longfor Properties, 1.2%; Sino-Ocean Land Holding, 1.2%; Guangdong Investment, 1.6%; Tsingtao Brewery Co., 1.6%; Golden Eagle Retail Group, 1.2%; Shanghai Industrial Holdings, 1.1%; Zhaojin Mining Industry, 1.1%; and Digital China Holdings, 1.1%. The ETF was launched on January 30, 2008. It has an expense ratio of 0.70% and a current yield of 2.9%. In the latest issue of Canadian Wealth Advisor, we examine the prospects for these two ETFs to move higher as China’s economy grows. We also look at the potential risks and rewards of the Chinese government’s plans to increase spending in order to ease the growing gap between the rich and poor. We conclude with our clear buy-hold-sell advice on both ETFs. Canadian Wealth Advisor covers safe money investments for turbulent times, primarily ETFs, REITs and well-established dividend-paying stocks. You can get a special risk-free introductory subscription to Canadian Wealth Advisor at a savings of $50.00 off the regular rate. Click here to get started right away.
