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Chinavestor ETF Spotlight: Guggenheim China Real Estate ETF

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real_estate December 10, 2010 (Chinavestor) To say that property prices and the real estate market at large have been a pivotal issue for investors in Chinese equities to contend with in 2010 would be an accurate statement. It would also be an understatement. Rising property values in China's major cities have been one of the primary reasons Beijing has been so diligent in its fight against inflation. So yes, real estate in China is a pretty big deal and the best way for investors to be involved with Chinese real estate without actually buying property in China is with the Guggenheim China Real Estate ETF (NYSE:TAO).

The Guggenheim China Real Estate ETF (NYSE:TAO), which will celebrate its three-year anniversary next week, tracks the AlphaShares China Real Estate Index and offers investors exposure to real estate in mainland China, Hong Kong and Macau. Actually, 73% of Guggenheim China Real Estate ETF's (NYSE:TAO) geographic allocation is weighted to Hong Kong, the rest is to China.

Guggenheim China Real Estate ETF (NYSE:TAO) 2008-2010


The-41 stock ETF focuses primarily on large-cap companies with a weighted average float-adjusted market capitalization of almost $7 billion. One neat element to the Guggenheim China Real Estate ETF (NYSE:TAO) as it currently trades is a yield of 2.9%. That's not incredible, but for it is certainly better than what most bonds and cash investments are offering investors these days.

The Guggenheim China Real Estate ETF (NYSE:TAO) has certainly been volatile this year and that's no surprise given the emphasis the mainstream financial media has placed on Chinese property prices. The ETF has been up as much as 20% on a year-to-date basis and down as much as 18%. As things currently stand, the fund is up 11% year-to-date, barely outpacing the S&P 500.

It might be that volatility that is keeping investors away from the Guggenheim China Real Estate ETF (NYSE:TAO). As we noted earlier, the fund is almost three years old, yet it has only attracted $68.4 million in assets under management. There have probably been some outflows this year and $68 million AUM is enough to keep the fund in business, but when considering that some ETFs that have been on the market just a matter of months have already accumulated $100 million AUM, TAO's asset haul looks tame by comparison.

In addition, the expense ratio of 0.65% is a tad on the high side, but the Guggenheim China Real Estate ETF (NYSE:TAO) remains the best option U.S. investors have China property exposure. Due to macroeconomic forces, it is risky trying to predict what 2011 might have in store for the Guggenheim China Real Estate ETF (NYSE:TAO), but the ETF is certainly worth watching.

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