etf

GUGGENHEIM CHINA SMALL CAP ETF $25.66 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) 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.

The $205.6-millon fund’s top holdings are Shenzhou International, 1.1%; Air China, 1.0%; Zijin Mining, 1.0%; China Everbright, 1.0%; Zhejiang Expressway, 1.0%; CSPC Pharmaceutical, 1.0%; Aluminum Corp. of China, 1.0%; Datang International Power, 1.0%; and Shanghai Electric, 1.0%.

As China’s economy matures and wages rise, domestic spending should continue to increase. As well, the country’s leaders recently announced that they will extend social services to migrant workers, and they will likely have to make further investments in programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.

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Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

ISHARES CHINA LARGE-CAP ETF $42.10 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the FTSE China 50 Index, which is made up of the 50 largest, most liquid Chinese stocks. All of the companies in the index trade on the Hong Kong exchange. Some also trade as American depositary receipts (ADRs) on New York. The fund’s top holdings are Tencent Holdings, 8.4%; China Construction Bank, 7.9%; China Mobile, 7.7%; Industrial & Commercial Bank, 7.2%; Bank of China, 6.1%; China Life, 4.8%; Ping An Insurance, 4.5%; PetroChina, 4.1%; CNOOC Ltd., 3.9%; China Petroleum and Chemical, 3.7%; Agricultural Bank of China, 2.5%; and China Pacific Insurance, 2.5%. The fund’s holdings give it the following industry breakdown: Financials, 50.3%; Oil and Gas, 13.8%; Telecommunications, 11.1%; Technology, 9.9%; Consumer Goods, 6.3%; Industrials, 4.2%; and Basic Materials, 2.4%. Its expense ratio is 0.74%....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investment tips and stock market advice. Each Investor Toolkit update gives you a fundamental piece of investment advice, and shows you how you can put it into practice right away.

Today’s tip: “There are three ways you can ensure that you get the maximum profit, and tax benefit, from your tax free savings account.”

The federal government first made the tax free savings account (TFSA) available to investors in January 2009. These accounts let you earn investment income — including interest, dividends and capital gains — tax free. You could contribute $5,000 in 2009 to start your tax free savings account.

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iShares S&P/TSX Capped Energy Index ETF, $12.97, symbol XEG on Toronto (Shares outstanding: 70.3 million; Market cap: $911.8 million; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.60%, and it yields 1.8%. The ETF’s top 10 holdings are Suncor Energy, 21.3%; Canadian Natural Resources, 15.6%; Cenovus Energy, 7.2%; Imperial Oil, 5.1%; Crescent Point Energy, 4.9%; Encana Corp., 4.7%; Talisman Energy, 3.5%; ARC Resources, 3.3%; Husky Energy, 3.2%; and Tourmaline Oil, 2.6%. We still think most investors are better off investing in individual companies as part of a well-balanced, diversified portfolio rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level can cut your return by reducing top performers’ contributions if they rise to make up more than the capped limit....

ISHARES AUSTRALIA INDEX FUND $23.48 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 79 largest Australian stocks. Its MER is 0.48%.

The fund’s top holdings include Commonwealth Bank of Australia, 11.7%; Westpac Banking Corp., 9.1%; BHP Billiton, 8.5%; Australia and New Zealand Banking Group, 7.9%; National Australia Bank, 6.9%; Wesfarmers, 4.2%; CSL Ltd., 3.6%; Woolworths, 3.5%; Woodside Petroleum, 2.3%; Rio Tinto, 2.2%; Telstra Group, 2.2%, and Scentre Group, 1.7%; and Westfield Group, 1.5%.

Australia benefits from its stable banking and political systems. It is also rich in natural resources and close to key Asian markets with vast potential, including India and China.

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SPDR S&P CHINA ETF $79.29 (New York symbol GXC; buy or sell through brokers; www.spdrs.com) aims to track the S&P China BMI Index, which is made up of all publicly traded Chinese stocks available to foreign investors. Right now, the fund holds 307 stocks.

The $1.0-billion fund’s top holdings are Tencent Holdings, 7.7%; China Mobile, 6.2%; Baidu, 6.1%; China Construction Bank, 5.7%; Industrial & Commercial Bank, 5.1%; Bank of China, 3.3%; China Life Insurance, 2.4%; CNOOC Ltd., 2.1%; PetroChina, 2.1%; and China Petroleum & Chemical, 1.9%.

The ETF was launched on March 19, 2007. It has a 0.59% MER and yields 2.5%.

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ISHARES MSCI BRAZIL INDEX FUND $39.87 (New York symbol EWZ; buy or sell through brokers) is an ETF that is designed to track the Brazilian stock market.

Its top holdings are Cia Itau Unibanco Holding (banking), 9.2%; Petrobras (oil and gas), 8.1%; Banco Brandesco SA, 7.9%; AmBev (beer and beverages), 7.5%; Vale do Rio Doce (mining), 5.8%; BRF SA (food), 4.3%; and Cielo SA (payment processor), 3.3%.

The ETF was launched on July 10, 2000. It has a 0.61% expense ratio.

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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $41.09 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange.

The fund’s top holdings are S.A.C.I. Falabella (retail), 10.3%; Enersis SA (electricity), 9.6%; Empresas Copec SA (conglomerate), 7.8%; Empresa Nacional de Electricidad (electricity), 7.2%; LATAM Airlines, 5.5%; Banco Santander Chile (banking), 5.0%; Empresas CMPC (pulp and paper), 4.6%; Banco de Chile, 4.5%; Cencosud SA (retailer), 4.4%; and Quimica y Minera de Chile (mining), 3.9%.

The fund’s industry breakdown is: Utilities, 25.9%; Financials, 18.7%; Materials, 12.8%; Consumer Discretionary, 12.5%; Consumer Staples, 9.5%; Energy, 7.9%; Industrials, 7.8%; Telecommunications, 2.4%; and Information Technology, 2.0%.

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ISHARES MSCI GERMANY FUND $28.57 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.

The ETF’s top holdings are Bayer (diversified chemicals), 10.2%; Siemens (engineering conglomerate), 7.9%; BASF (chemicals), 7.2%; Daimler (autos), 6.7%; Allianz (insurance), 6.5%; SAP (software), 5.5%; Deutsche Telekom, 4.5%; Deutsche Bank AG, 3.8%; BMW AG, 3.1%; and Volkswagen AG, 3.1%.

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