This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

China Driving the Fate of ETFs

By Kevin Grewal, Editorial Director at www.SmartStops.net

NEW YORK ( TheStreet) -- When it comes to the global economy, China continues to be the talk of the town. To take it a step further, the nation, expected to witness the largest economic growth in 2010, is said to be driving the fate of exchange traded funds.

According to a recent Securities and Commission filing by the Chinese Investment Corporation, or CIC, the sovereign wealth fund holds north of $9 billion in U.S. equity investments. The detailed filing further indicates the following allocations:


  • $254 million to the iShares S&P Global Materials (MXI)
  • $235 million to the Select Sector SPDR TR SBI Int Energy (XLE)
  • $207 million to the iShares MSCI EAFE Index (EFA), which boasts BHP Billiton (BHP) as one of its top holdings.
  • $156 million to the SPDR Gold Trust (GLD)
  • $116 million to the Market Vectors Gold Miners ETF (GDX)
  • $107 million to the iShares S&P Global Energy (IXC)
  • $83 million to the Materials Select Sector SPDR (XLB)
  • $79 million to the U.S. Oil Fund (USO)

>>Want More ETFs? Visit Our ETF Screener Page

In addition to these allocations, the CIC has allocated $6.2 million to Anadarko Petroleum (APC), and $5.2 million to Chesapeake Energy (CHK), which are holdings in XLE and IXC and indirectly influence their performance. Aggregately, CIC has invested nearly $420 million in energy based ETFs and nearly $450 million to ETFs that track metals and mining companies. Both of these commodity-based sectors are highly valuable to China in that the nation's appetite for foreign oil and materials is likely to increase, pushing up demand for both.

China is selling U.S. Treasuries and using these proceeds to reinvest in dollar-denominated securities via ETFs, making the nation's sovereign wealth fund a major player in the ETF landscape.

With over $2 trillion in foreign currency reserves, China is likely to continue this trend of buying ETFs due to its vested interest alone, being the driving force behind these appreciating equities.

An opportunity in these aforementioned ETFs exists; however, it is equally important to consider the inherent risks that they carry. A good way to mitigate these risks is through the implementation of an exit strategy that triggers price points at which an upward trend could potentially be coming to an end and enable one to preserve equity. Such a strategy can be found at www.SmartStops.net.

Written by Kevin Grewal in Laguna Niguel, Calif.

Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at SmartStops.net where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.87 -116.81 -0.68%
S&P 500 1,982.77 -11.52 -0.58%
NASDAQ 4,508.6880 -19.0010 -0.42%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs