This newly launched ETF will be extremely volatile for two reasons: Tech and China, each of which carry high Beta on their own in contrast to US equities at large. This fund will perform well as long as the long term economic growth and prosperity in China continues, coupled with rising speculative stock purchases in China. Note however that this ETF will be prone to rapid declines during selloffs and investors should not expect performance to be completely de-coupled from US crashes as investors were led to believe leading into 2008 when they faced a rude awakening. As evidenced in the recent market selloff, China took it on the chin on the way down, but has rebounded explosively, surpassing US and other western bourses by a wide margin.
Name: Claymore China Technology ETF
Performance: Newly Launched
Expense Ratio: 0.70%
Disclosure: Long CQQQ at the time of publication
Background: According to Nasdaq, The tech sector in China is an area that appears poised for continued growth in the coming years. Despite a challenging worldwide economic environment, China is predicted to claim the world’s highest GDP growth in both 2009 and 2010. It is expected that this growth may result in a substantial increase in China’s technology demands. Approximately $54 billion of China’s $585 billion stimulus package is being allocated to technology advancements, with a new focus on high-end production. (China’s reverse brain drain is their gain).
CQQQ currently has 34 holdings with the ten largest being:
Tencent Holdings 10.2%
Shanda Interactive Entertainment 4.5%
Lenovo Group 3.7%
Kingboard Chemical Holdings 3.7%
This ETF is the first of 4 that Claymore will be launching to focus on the China sectors:
China Technology (CQQQ)
China All-Cap (YAO)
China Small-Cap (HAO)
China Real Estate (TAO)