An Exchange Traded Fund (ETF) is an investment that mirrors the performance of an index like the S&P 500 ETF or a portfolio of sector-related securities like the Claymore S&P Global Water ETF.
An ETF wrap contains a group of carefully selected, allocated and managed individual ETFs.
On June 21, Claymore Investments introduced two innovative international wrap products that trade like ETF stocks on the Toronto Stock Exchange, namely the Claymore Global Balanced Growth ETF (CBN on TSX) and the Claymore Global Balanced Income ETF (CBD on TSX).
Claymore ETF Wrap Asset Allocations
The Claymore Global Balanced Growth ETF (Growth wrap) has a more aggressive asset mix than the more conservative and yield-oriented Claymore Global Balanced Income ETF (Income wrap). However, both Growth and Income wraps consist of the same diversified set of 13 ETFs, but with different weightings as shown below (as of July 20, 2007).
- Claymore US Fundamental ETF ... 19.94% of Growth wrap (2.51% of Income wrap)
- Claymore Canadian Fundamental Index ... 11.57% of Growth (3.92% of Income)
- Claymore S&P/TSX Cdn Preferred Share ETF ... 9.40% of Growth (9.47% of Income)
- iSHARES Cdn S&P/TSX Cap REIT ... 9.39% of Growth (9.46% of Income)
- Claymore International Fundamental ... 8.41% of Growth (0.97% of Income)
- Claymore Japan Fundamental ... 7.74% of Growth (0.83% of Income)
- iSHARES Cdn Scotia Capital ... 7.26% of Growth (19.49% of Income)
- iSHARES Cdn Corp Bond Index ... 4.87% of Growth (4.81% of Income)
- Claymore Cdn Dvdnd & Income Achievers ... 4.85% of Growth (28.18% of Income)
- iSHARES Cdn Govt Bond Index ... 4.68% of Growth (4.81% of Income)
- Claymore BRIC ... 4.60% of Growth (0.85% of Income)
- CLAYMORE Oil Sands Sector ... 4.43% of Growth (1.45% of Income)
- iUNITS Dividend Index Fund ... 2.85% of Growth (13.24% of Income)
Claymore does all the tricky work like allocating and rebalancing assets. The above 13 ETFs represent over 4,000 securities from stocks to real estate investment trusts to bond ETF holdings, which Claymore manages daily. To ensure that investor goals are consistently met, Claymore uses sophisticated proprietary systems to rebalance its ETF investing quarterly. All clients have to do is pay the low management expense fee of 0.70% on the easy-to-use ETF wrap.
Claymore Global Balanced Growth ETF
The Growth wrap is geographically diversified. Canadian securities account for about 60% of the Growth ETF portfolio with 20% from the United States, 12% from Asia, 6% from Europe and the remainder from the rest of the world.
Among ETFs in the Growth Wrap, the US Fundamental ETF has the highest weighting (19.94%). Top ten holdings for the US Fundamental ETF are: Exxon Mobil (6.48% of total), General Electric (5.78%), Kraft Foods (4.67%), Citigroup (3.93%), Chevron (3.57%), Microsoft (3.29%), Verizon (3.16%), Bank Of America (2.95%), Wal-Mart (2.88%) and General Motors (2.49%).
The ten largest holdings in the Claymore Canadian Fundamental Index Are BCE (6.65% of total), Royal Bank (5.43%), Alcan (4.41%), Encana (4.19%), Bank of Nova Scotia (4.18%), Manulife (3.98%), TD Bank (3.65%), Petro-Canada (3.1%), Bank of Montreal (3.16%) and Imperial Oil (2.97%).
The Growth wrap will pay an estimated quarterly distribution of roughly 1.70%, with reinvestment options. As of July 20, the ETF stock price for CBN is CDN$20.41.
Claymore Global Balanced Income ETF
The Income wrap is more focused on securities like bonds, preferred shares and income trusts. Canada accounts for 95% of the Income wrap’s securities, with 2.5% from the United States.
In the Income wrap, the Claymore Canadian Dividend & Income Achievers has the highest weighting (28.18%). Top ten holdings for the Achievers fund are: Fording Canadian Coal Trust (8.14% of total), Chemtrade Logistics Income Fund (6.61%), Bonterra Energy Income Trust (4.09%), AGF (3.23%), IGM Financial (3.00%), Bank of Montreal (2.95%), Transcanada (2.86%), Bank of Nova Scotia (2.68%), National Bank (2.67%) and Energy Savings Income Fund (2.63%).
The Income wrap will pay an estimated quarterly distribution of roughly 4.20%, with reinvestment options. As of July 20, the ETF stock price for CBD is CDN$20.42.
Diversified Global ETF Investing
Claymore ETF wraps enable investors to easily build a professionally managed core portfolio of ETF funds representing over 4,000 blue-chip securities from around the world. With a minimal investment of time and money, savvy consumers can now enjoy world-class diversification previously the exclusive reserve of the rich.
Sources for this Article
This article presents independent insights and calculations including estimates of Claymore ETF wrap distributions based on data from claymoreinvestments.ca.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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