There’s a man for all seasons, but is there a market cap for all seasons? The Claymore/AlphaShares China All-Cap ETF (NYSE: YAO) would lead us to believe the answer is yes. YAO is a curious creation among Chinese ETFs when considering the iShares/FTSE Xinhua China 25 Index Fund (NYSE: FXI) is the dominant ETF when it comes to Chinese large-caps and Claymore’s own Claymore/AlphaShares China Small-Cap ETF (NYSE: HAO) has proven to be popular among investors. Not only that, but HAO’s performance this year puts it near the top among long, unleveraged China-specific ETFs.
So where do YAO fit in? Good question. YAO is supposedly “all cap,” which would lead investors to believe that buying this ETF gets them a fair amount of exposure to large, mid and small-caps. That’s not the case. Look at YAO’s top-10 holdings, which account for roughly 45% of the ETF’s weight and you’ll see an obvious large cap bias with stakes in Baidu (Nasdaq: BIDU), Cnooc (NYSE: CEO), China Mobile (NYSE: CHL) and PetroChina (NYSE: PTR). In fact, Claymore’s Web site says as of June 30, YAO held 150 stocks with a weighted average float-adjusted market cap of $15.1 billion. That’s definitely large-cap territory.
And like FXI, YAO has a heavy weighting to Chinese financials (more than 32%). Only two other sectors, energy and information technology receive double digit weights. Add those three sectors up and they account for more than 60% of YAO’s weight. If that lack of sector diversity doesn’t trouble you, than you’re better off with FXI and then you can own HAO, which is far more diverse than both FXI and YAO, to balance things out.
Not only that, but YAO suffers from extremely light volume, averaging just over 23,000 shares per day. HAO’s volume is almost 10 times greater and FXI trades more than 21 million shares per day. HAO is up 5% year-to-date while YAO is flat. YAO isn’t what the Professor would call a bad ETF, but for investors that are really bullish on China, it’s not a terrible idea to get your large and small-cap exposure by owning both FXI and HAO, so just take a pass on YAO for now.
Similar Posts:
- Under The Hood: WisdomTree LargeCap Dividend Fund
- Benzinga’s Top ETF Decliners (SQQQ, TYP, FAS, SGG )
- Is It Time To Ring Up This Telephone ETF?
- ETFs To Watch February 17, 2011 (KOL, EWP, THD, PCY)
- Chinese IPOs On The Rise Again (YOKU, DANG)
