New China All Cap Index includes Chinese companies listed in Hong Kong and New York including the technology and consumer sectors
Walnut Creek, CA, October 14, 2009
The first China All Cap Index designed to track Chinese companies of all capitalization sizes has been introduced by AlphaShares, LLC, it was announced today.
The AlphaShares China All Cap Index (Bloomberg: ACNAC) measures the performance of large, mid and small capitalization Chinese companies currently trading on the Hong Kong or New York stock exchanges and available to international investors. The index uses a modified market capitalization weighting methodology that limits individual companies to five percent of the index and sector exposure to 35 percent of the index. It does not currently include China A-Shares or China B-Shares.
“The major China indexes and the ETFs based on them are materially flawed,” said Dr. Burton G. Malkiel, Co-founder and Chief Investment Officer of AlphaShares. “The largest does not include important Chinese technology companies such as Baidu, BYD or Tencent. It has 45% exposure to financials - dominated by extremely large state owned banks. It has nearly 20% in state owned oil companies, and perhaps worse, it has no exposure to the Consumer sectors. Investors should be seeking exposure to China but they should look more closely at what they are buying when they use an (index-based) ETF. We believe the AlphaShares China All Cap Index is now the best index available for investors seeking exposure to the increasingly important China equities market.”
The AlphaShares China All Cap Index has been licensed to Claymore Advisors, LLC (“Claymore”) and it is anticipated to be the basis for the Claymore/AlphaShares China All-Cap ETF (NYSE Arca: YAO) that is scheduled to launch later this month. AlphaShares has licensed two other China indexes to Claymore. The AlphaShares China Real Estate Index (Bloomberg: ACNRE) serves as the basis for the Claymore/AlphaShares China Real Estate ETF (NYSE Arca: TAO) which provides exposure to Chinese real estate companies and the AlphaShares China Small Cap Index (Bloomberg: ACNSC) serves as the basis for the Claymore/AlphaShares China Small Cap Index ETF (NYSE Arca: HAO) which provides exposure to Chinese small cap stocks.
AlphaShares, LLC is an investment management firm dedicated to providing investors with strategies and products to participate in China’s fast growing economy. AlphaShares investment philosophy and strategies are based on the beliefs and research of co-founder and Chief Investment Officer, Dr. Burton G. Malkiel. The AlphaShares team has over 100 years of experience with firms including, Barclays Global Investors, BARRA, Renaissance Technologies, Robertson Stephens X Company and The Vanguard Group. More information is available at www.alphashares.com.
Investors should consider the following risk factors and special considerations associated with investing in the Funds, which may cause you to lose money, including the entire principal amount that you invest. Equity Risk: The risk that the value of the securities held by the Funds will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities held by the Funds participate, or factors relating to specific companies in which the Funds invests. Foreign Investment Risk: Investing in non-U.S. issuers may involve unique risks such as currency, political, and economic risk, as well as less market liquidity, generally greater market volatility and less complete financial information than for U.S. issuers. Investment in securities of issuers based in developing or “emerging market” countries entails all of the risks of investing in securities of non-U.S. issuers, as previously described, but to a heightened degree. China Investment Risk: Investing in securities of Chinese companies involves additional risks, including, but not limited to: the economy of China differs, often unfavorably, from the U.S. economy in such respects as structure, general development, government involvement, wealth distribution, rate of inflation, growth rate, allocation of resources and capital reinvestment, among others; the central government has historically exercised substantial control over virtually every sector of the Chinese economy through administrative regulation and/or state ownership; and actions of the Chinese central and local government authorities continue to have a substantial effect on economic conditions in China. In addition, previously the Chinese government has from time to time taken actions that influence the prices at which certain goods may be sold, encourage companies to invest or concentrate in particular industries, induce mergers between companies in certain industries and induce private companies to publicly offer their securities to increase or continue the rate of economic growth, control the rate of inflation or otherwise regulate economic expansion. From time to time, certain of the companies comprising the Index that are located in China may operate in, or have dealings with, countries subject to sanctions or embargoes imposed by the U.S. government and the United Nations and/or in countries identified by the U.S. government as state sponsors of terrorism. REIT Risk: Investments in securities of real estate companies involve risks. These risks include, among others, adverse changes in national, state or local real estate conditions; obsolescence of properties; changes in the availability, cost and terms of mortgage funds; and the impact of changes in environmental laws. Micro-, Small- and Medium-Sized Company Risk: Investing in securities of these companies involves greater risk as their stocks may be more volatile and less liquid than investing in more established companies. These stocks may have returns that vary, sometimes significantly, from the overall stock market. Micro-cap companies may be newly formed, less developed and there may be less available information about the company. In addition, the Funds are subject to: Non-Correlation Risk, Replication Management Risk, Issuer-Specific Changes, and Non-Diversified Fund Risk. Please read the Fund’s prospectus for more detailed information on these risks and considerations.
A registration statement relating to YAO has been filed with the Securities and Exchange Commission, but has not yet become effective. YAO may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or a solicitation of any offer to buy; nor shall there be any sale of these securities in any state where the offer, solicitation, or sale is not permitted.
Kevin T. Carter