investment

GUGGENHEIM CHINA SMALL CAP ETF $19.04 (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 $155.7-million fund’s top holdings are Shimao Property Holdings, 1.7%; Longfor Properties, 1.6%; Sino-Ocean Land Holding, 1.5%; Guangdong Investment, 1.5%; Tsingtao Brewery Co., 1.4%; China Railway Group, 1.4%; China Railway Construction Corp., 1.4%; Zoomlion Heavy Industry, 1.4%; Agile Property Holdings, 1.3%; and China State Construction International Holdings, 1.2%.

As China’s economy matures, domestic spending should continue to rise. As well, China’s leaders will likely need to increase spending on programs and services 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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No experienced, successful investor will be surprised at the suspicions that cling to hedge funds in the wake of repeated financial crises. When that much money floods into an investment area that fast, unpleasant financial events are bound to happen. The huge investment attracts unscrupulous characters, and converts more than a few amoral individuals into thieves. The returns in Bernie Madoff’s hedge fund turned out to be pure fiction....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Financial ratios will tell you a lot about a stock—but look closer and you may get an even clearer picture.”...

Our three-part Successful Investor investment approach is a starting point to success in investing, not a step-by-step blueprint. Just to refresh your memory, here are the three key points to our Successful Investor approach:

1. Invest mainly in well-established companies, with a history of sales if not earnings and dividends.
2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities.
3. Downplay or avoid stocks in the broker/media limelight. Instead, look for stocks with hidden value that are less widely recognized as attractive investments.

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Mutual funds, index funds and exchange traded funds (ETFs) often engage in securities lending. That is, they lend securities to third-party borrowers, mostly hedge funds and investment firms, that mainly use them for short selling. The borrowers then sell the securities with the hope of buying them back at a lower price. This is, of course, a way of speculating on a price decline. The lending institution receives all the dividends and interest it was entitled to as an investor in the security, plus a fee for making the loan. There is negligible risk of losing money on the loan, since the borrower puts up collateral of at least 102% of the borrowed securities’ value. This collateral typically consists of cash, T-bills or highly rated short-term debt instruments. The borrower is also liable for any shortfall between the value of the collateral and the value of the securities. If the value of the securities rises, the borrower has to add to the collateral on a daily basis to maintain coverage at 102%....

In the wake of the financial crises that have occurred in recent years, there has been a good deal of pressure in favour of stricter securities regulation. One company that serves the financial community could benefit substantially from tighter securities regulations. BROADRIDGE FINANCIAL SERVICES INC. (New York symbol BR; www.broadridge.com) gets 70% of its revenue from its Investor Communication Solutions division, which distributes proxy materials such as ballots to investors in stocks and mutual funds. It also counts the votes. Broadridge’s ProxyEdge software helps centralize and simplify shareholder voting, particularly in meetings involving multiple ballots. The company mails and processes material for 60% of proxy votes worldwide....

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for the Inner Circle. This week, an Inner Circle member asked a question about one of China’s biggest budget hotel operators. In response, Pat gives an assessment of the potential rewards—and many risk factors—that come with investing in China. ...

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.7 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.8%; TSINetwork Rating: Extra Risk; www.cenovus.com) operates three heavy oil projects in Alberta and one in Saskatchewan. It gets about half of its output from the oil sands. Conventional oil and natural gas wells supply the other half.

U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta.

These properties produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas. ConocoPhillips recently spun off its refining operations as a separate company called Phillips 66 (New York symbol PSX). This new firm owns the other 50% of these refineries.

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TELUS CORP., Toronto symbols T $64.00 and T.A $62.68, has revived its plan to merge its common shares (one vote per share) and its non-voting class A shares into a single class. Under the terms of the proposal, each non-voting share will become one common share. Investors in each share class, voting separately, must approve the plan at a special meeting on October 17, 2012. The company cancelled a vote on the proposal that was scheduled for May 2012 because it felt it had little chance of winning. That’s because U.S.-based hedge fund Mason Capital, which now owns around 19% of Telus’s common shares and a small portion of the non-voting shares, said it would vote against the plan. Mason is using a complex stock-trading strategy that would let it lock in a profit if shareholders reject the proposal....

The more you know about investing, the more successful you will be. That has been Pat McKeough’s approach through four decades as an investor and investment counsellor. He regularly presents his views on specific investment topics on video in order to share the insights he has gathered over the years. In today’s video, Pat points out that while the knowledge you acquire is certain to enhance your success an investor, it is also true that a little knowledge can be a dangerous thing. That applies to one of the mainstays of stock research, the price/earnings ratio (the current share price divided by earnings per share). As a staple of stock quotes, the p/e ratio is widely used as a guide to the future profitability of a stock. But when it’s used on its own without taking other factors into account, Pat observes, it can lead to very costly mistakes. ...