AlphaShares, the creator of the indexes behind the Claymore/AlphaShares Small Cap Index ETF (HAO) and Claymore/AlphaShares China Real Estate ETF (TAO), has announced the creation of an All Cap China index. The new benchmark will track all firms over $500 million in market cap that trade on either the New York or Hong Kong stock exchanges. The index uses a modified market capitalization weighting methodology that limits individual companies to 5% of the index and sector exposure to 35% of the index and is anticipated to be the basis for a new fund from Claymore under the symbol YAO.
Dr. Burton G. Malkiel, Co-founder and Chief Investment Officer of AlphaShares, believes that this new index will be a huge step up from what is currently on the market. “The major China indexes and the ETFs based on them are materially flawed, said Malkiel in a press release. “The largest does not include important Chinese technology companies such as Baidu, BYD or Tencent. It has 45 percent exposure to financials – dominated by extremely large state owned banks. It has nearly 20 percent in state owned oil companies, and perhaps worse, it has no exposure to the Consumer sectors.”
The new ETF is expected to launch by the end of the month. To stay up to date on the launch of YAO and other ETFs, make sure to sign up for our Free ETF Newsletter.
Disclosure: No positions at time of writing.