Como se combate o populismo? "Com eleições", responde Fukuyama

[Keyser Soze]

Three China ETFs Offer Different Approaches
Wednesday August 9, 7:00 pm ET

Donald H. Gold

For all the hype about spectacular investment opportunities in China, much of it well deserved, American investors face daunting challenges.

A good number of companies in the colossal emerging market trade on the Nasdaq and NYSE. Many more are listed on exchanges in mainland China or Hong Kong.

A U.S. investor might be better off buying exchange traded funds, which give greater access to broad swaths of China's economy compared with the hunt-and-peck approach of prospecting for ADRs.

At the root of any decision is China's emergence as an economic and political power. China's vast population and stellar growth are a potent combination. Beijing says its economy is growing 9.9% a year.

A China ETF is for the investor who wants a piece of that action. It's the fund's job to own a defined piece, not to trade in and out of it. Like all ETFs, these are passive investment funds that track an index.

Three China ETFs

Three big plays in the China ETF arena are iShares FTSE/Xinhua 25 Index (NYSE:FXI - News), which is up 27% this year; PowerShares Golden Dragon Halter USX China (AMEX:PGJ - News), up 13.32%; and iShares MSCI Hong Kong Index (AMEX:EWH - News), up 8%.

"The FXI (iShares FTSE/Xinhua 25 Index) is heavily weighted in financials and telecom," explained Anthony Welch, portfolio Manager at Sarasota Capital Strategies. "Its top holding, China Mobile (NYSE:CHL - News), at 10.5% of assets, is up more than 50% in the last 12 months."

PowerShares Golden Dragon Halter USX China has funneled just 6% of its assets into China Mobile.

PowerShares is more diversified than iShares FTSE/Xinhua 25. PowerShares' top five holdings make up 25.97% of its portfolio. For iShares, the top five account for 40.07%.

Loaded With Internet

"PowerShares has a lot of info-tech and Internet stocks, which haven't performed as well," Welch said.

Sector performances can vary a lot more in China than in the U.S.

But iShares' aggressive posture holds higher risk. If one of those big holdings goes bad, the fund's total returns will suffer more than if the same bad luck hits PowerShares.

The iShares MSCI Hong Kong Index lags the two mainland funds. But Hong Kong is considered a separate entity from China with its own currency, parliament and a long history of capitalism.

Many of the companies in this index were founded when the British held sway on the island, and still have connections to the U.K. This ETF has been around for 10 years and is heavily weighted toward financial companies and utilities.

IShares MSCI Hong Kong's history shows how rocky China, or any emerging market, can be.

Returns swing from losses in the upper teens each year in 2000-02 to a 36% surge in 2003. Its five-year performance is 10%.



http://biz.yahoo.com/ibd/060809/etf.html

[Keyser Soze]

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http://news.morningstar.com/article/art ... d=wwhome1a