January 04, 2007

The Claymore Four

Claymore Advisors took a step toward expanding its unusual collection of ETFs by filing with the SEC for four more interesting funds.

The Claymore/Clear Spin-Off ETF will hold the stocks of companies that have been spun off from larger corporations. The idea is that these stocks will be able to better focus on their core markets, and in turn outperform the broader market. To boost performance further, Claymore will layer a black-box quantitative screen on top of the universe of spin-offs, with a goal of selecting the 40 spin-offs with the greatest risk/reward profile.

The new Claymore LGA Green ETF, meanwhile, will combine SRI with enhanced indexing. The fund is designed to track something called the "Light Green Eco*Index," which screens companies for strong public environmental performance records, and then uses a quantitative performance strategy to select companies with the best risk/reward profile.

Taking another tack, the new Claymore/Ocean Tomo Patent ETF will track an index of 300 companies with high levels of intellectual property. The developers of the underlying index believe that these firms are well-positioned to outperform in the modern era, where information and intellectual property play an increasingly central role in economic performance.

Finally, the Claymore/Sabrient Defender ETF will track a deep value index designed to hold steady if the broader equity markets take a tumble.

The funds will charge between 50-60 basis points in annual expenses.

Commodity Sectors Catch On

PowerShares filed with the SEC for the right to launch seven new "sector" commodity ETFs. The new ETFs are based on "optimum yield" indexes from Deutsche Bank (DB), which include the spot return, "roll yield" and collateral interest income on each commodity investment, and use a flexible roll strategy in an attempt to maximize returns.

The funds will list on the AMEX and cover the Agriculture (AMEX: DBA), Base Metals (AMEX: DBB), Energy (AMEX: DBE), Gold (AMEX: DGL), Oil (AMEX: DBO), Precious Metals (AMEX: DBP) and Silver (AMEX: DBS) markets.

Similar sector funds from ETF Securities are already trading in Europe.

The Oil, Gold and Silver funds will charge 0.50 percent in expenses per year, while the remaining four funds will charge 0.75 percent each. The funds will also incur brokerage fees ranging from three to 16 basis points per year.

No-Fee Trading

Bank of America (BoA) announced plans to eliminate brokerage trading fees for customers who hold $25,000 or more in BoA deposit accounts. Accounts will be allowed 30 free trades a month. The move could have significant implications for the ETF industry if it catches on at other brokerages, as it removes one of the largest impediments to using ETFs-commission costs.

The catch … and there's always a catch … is that investors must store $25,000 in one of BoA's banking, checking or deposit accounts, which offer subpar interest rates compared to best-of-breed alternatives. Those lower interest rates can easily offset the commissions savings.

BoA isn't the first company to offer free trades: Wells Fargo offers 50 free trades per year to accounts with $250,000 or more in assets, and start-ups like Zecco offer free trades with no strings attached.

ETCs List In Germany

ETF Securities listed its family of 31 exchange-traded commodities (ETC) on the Deutsche Börse's Xetra platform. The funds, which include 21 individual commodity ETCs and 10 sector/broad-based funds, are the first ETCs to be priced in euros.

Interestingly, the first trades on the Deutsche Börse were not in popular commodities like gold and oil, but rather in oft-forgotten agricultural markets. Corn, for instance, saw the highest euro trading volume on day one, with nearly 20,000 euros worth of contracts trading hands.

Gold In Turkey

Turkey became the sixth country to host a gold bullion ETF, as Finans Portfoy launched its new Istanbul Gold ETF (GOLDIST) on the Istanbul Stock Exchange. In a move designed to attract foreign investors, the fund tracks the international spot price of gold in U.S. dollars. It charges 47 basis points in expenses.

Russia ETF In Germany

The Deutsche Börse launched the world's first (and so far only) ETF tied directly to the Russian market. The Lyxor ETF tracks the Dow Jones Rus Index Titans 10, which holds the 10 most liquid stocks on the Moscow Stock Exchange. Its two largest sectors are energy (51.6 percent) and basic industries (19 percent).

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