Having launched nine exchange-traded funds over the last few months, Claymore Securities has been one of the busiest ETF issuers of 2007 so far, and it’s far from done. Christian Magoon, the company’s senior managing director of product development, takes time to discuss the ETF business with Research readers.
Research: Claymore’s ETFs are not the typical traditional index funds. Tell us more about your investment philosophy.
Magoon: Claymore’s initial goal in the ETF business has been to provide access to unique investment strategies through a diverse group of index providers. Prime examples of this are the Claymore ETFs that seek to follow indices based on intellectual property valuation (OTP and OTR) or a sector rotation philosophy (XRO). Each ETF’s underlying index employs a set of fundamental selection and weighting criteria — derived by independent index providers — to drive a systematic, rules-based approach in an attempt to outperform the reference index.
There’s growing interest in investing in companies that don’t damage the earth. How does the Claymore LGA/Green ETF (GRN) play on that theme?
Unlike more speculative approaches that are promoted as pro-environment, GRN may serve as a core portfolio component for environmentally conscious investors. The index provider, Light Green Advisors (LGA), has pioneered a new type of green, eco-friendly investing that recognizes leading companies in every industry who are affecting real environmental progress. Together, the actions taken by these leading companies can have a dramatic impact on society’s collective carbon footprint.
The companies in LGA’s Eco*Index demonstrate a progressive reduction to their environmental impact. The Eco*Index uses an environmentally based scoring system to evaluate and rank the conduct of all companies in the S&P 500. E-scores are developed using third-party data provided by the Environmental Protection Agency (EPA) and other environmental organizations to evaluate corporate expenses associated with compliance with U.S. environmental statutes and the cost of corporate toxicity.
The Best Independent Research (BIR) ETFs take a novel approach because they screen stocks based upon financial data obtained from five different research shops. Tell us more.
BIR is an exclusive consortium of five independent research organizations [Ativo, Channel Trend, Ford Equity Research, Columbine Capital and Thomas White International] that have been consistently ranked by third-party evaluators among the top tier for the performance of their equity research picks. The indices designed by BIR use a proprietary composite ranking methodology to uniquely join five independent perspectives. BIR has licensed this methodology to Claymore for a large- to mid-cap approach (BST), a mid-cap value approach (BMV) and a small-cap core approach (BES).
The BRIC ETF (EEB) is one of Claymore’s most popular ETFs. What’s the case for investing in volatile emerging economies?