It looks as though investors have a feast of low-fee options in Canada to choose from during the Chinese Year of the Tiger.
Claymore Investments Inc. is poised to roll out an exchange traded fund (ETF) that will invest in the booming Chinese economy. See prospectus
What is interesting is that the Claymore China ETF will track the AlphaShares China Index, an all-capitalization index which Princeton economist Burton Malkiel - known for his finance classic A Random Walk Down Wall Street - helped design.
Mr. Malkiel, a big critic of active portfolio management, is also chief investment officer of U.S.-based AlphaShares LLC, an investment firm specializing in strategies and products to take advantage of investing opportunities in China. He is so bullish on the China story that he co-authored Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy.
The Claymore ETF is similar to U.S.-listed Claymore/AlphaShares China All-Cap ETF launched last October. The ETF will invest in some 150 stocks of Chinese companies listed in Hong Kong or New York, but also caps any firm to 5 per cent of the index and sector exposure to 35 per cent.
The Claymore offering is more diversified than other China ETFs launched in Canada. Mr. Malkiel is critical of existing major China indexes that don't include important Chinese tech firms like Baidu, BYD or Tencent and have no exposure to consumer sectors. See Seeking Alpha blog.
Last month, BlackRock Asset Management Canada Ltd. rolled out its iShares China Index ETF . This ETF invests in the U.S.-listed iShares FTSE/Xinhua 25 ETF, which tracks 25 of the largest Chinese stocks trading in Hong Kong. The China ETF has a management expense ratio (MER) of 0.85 per cent.
And Bank of Montreal rolled out its BMO China Equity Hedged to CAD ETF which invests in a basket of 44 depositary receipts listed in New York that have exposure to the Chinese equity market. This ETF has an MER of 0.65 per cent.
It's evident that not all China ETFs are alike so investors should figure out what exactly they want. As for fees, sources say that the MER of the Claymore ETF will be as competitive as the BMO ETF or even lower.
Isn't competition wonderful?