Global X Management Company introduced Global X China Materials ETF (CHIM) today (1/14/2010), completing its rollout of six China sector ETFs. The first two, Consumer (CHIQ) and Industrial (CHII), were launched in early December, while Technology (CHIB) , Financial (CHIX), and Energy (CHIE) hit the market around mid-month.
For the purposes of this ETF, the “Materials Sector” includes companies that focus on the mining and production of basic materials for industrial use but not for power generation. Global X places coal and uranium mining companies in its Energy ETF.
CHIM has an expense ratio of 0.65%. The underlying index uses a multi-tiered capped weighting methodology whereby the percentage weighting of each constituent is capped at 10%. Any excess weight is allocated proportionally to all other constituents and then capped again at 4.75%. The remaining excess is then allocated proportionally to all non-capped constituents.
This methodology should help provide a true sector representation without the extreme company overweighting present in the popular ETFs like the US Select Sector SPDRs. Only stocks tradable for foreign investors are eligible for inclusion. Index members must either be domiciled in China or have their main business operations in that country.
Global X China Materials ETF (CHIM) (CHIM summary) will track the S-BOX China Energy Total Return Index developed by Structured Solutions Ag for this ETF. The index fact sheet shows 28 constituents with none capped at 10% and 13 subject to the 4.75% cap weighting. The 13 capped positions are:
Aluminum Corporation of China, Zijin Mining Group, Jiangxi Copper, CITIC Pacific, Angang Steel, Maanshan Iron and Steel, Sinofert Holdings, China Molybdenum, Sinopec Shanghai Petrochemical, Zhaojin Mining Industry, Hunan Nonferrous Metals, Shougang Concord International Enterprises, and Real Gold Mining.
Top industry representation according to the CHIM fact sheet is metals & mining at 66% and chemicals at 34%. The prospectus and the Global X website have additional information on all six Global X China sector ETFs.
Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.