Claymore Plans Target-Date Junk ETF Lineup

September 02, 2010

Claymore Securities, the Lisle, Ill.-based fund sponsor, is planning a series of nine target maturity date high-yield corporate bond ETFs, according to papers it filed on Wednesday with the Securities and Exchange Commission.

The new funds, each with a unique annual maturity date ranging from Dec. 31, 2012 to Dec. 31, 2020, will track indexes of high-yield corporate, or “junk,” bonds furnished by Accretive Asset Management, the Naperville, Ill.-based advisory.

The proposed funds are:

  • The Claymore BulletShares 2012 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2013 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2014 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2015 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2016 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2017 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2018 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2019 High Yield Corporate Bond ETF
  • The Claymore BulletShares 2020 High Yield Corporate Bond ETF

 

Once each fund hits its target date, Claymore will make a cash distribution of net assets to shareholders, effectively closing down each ETF.

Accretive’s BulletShares indexes are heavy on financial-, pharmaceutical- and industrial-sector paper and, as their junk bond focus suggests, high on yield.

The top three holdings of the 2012 BulletShares Corporate Bond Index, for instance, are two notes from General Electric Capital Corporation with coupons of 5.25 percent and 6 percent, respectively, and a Pfizer bond with a 4.45 percent yield. The weighted coupon average for the 2012 BulletShares Corporate Bond Index is 5.7 percent.

Claymore, which plans to shutter four ETFs on Sept. 10, appears to be in the midst of a major product lineup reboot in an effort to focus on more profitable and easily marketed ETFs.

Claymore’s focus on relatively high-yielding debt looks timely, although the new funds won’t hit the market until least mid-December, once the 75-day quiet period for the proposed ETFs elapses.

But for now, concern among investors that the economy is slowing is motivating them to bolt from
U.S.
large-cap equity ETFs in August. Instead, they chose bonds and emerging markets securities. With $497.2 million in new money, the iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) had the seventh-highest inflows of all 1,040 U.S.-traded ETFs last month, according to data compiled by IndexUniverse.com.

The proposed funds will trade on the New York Stock Exchange’s Arca platform. The filing didn’t specify ticker symbols or expense ratios.

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