When Guggenheim Partners entered the ETF market, it wanted to make a permanent impression. Over the past year and a half, the firm acquired Claymore ETFs and Rydex SGI. The moves have vaulted Guggenheim to become one of the top 10 providers of ETFs worldwide, offering more than 100 ETFs and ETPs. Guggenheim’s consolidated ETF lineup now includes BulletShares, CurrencyShares and RydexShares. All three will be marketed in the U.S. under the Guggenheim name.
To discuss what lies ahead for Guggenheim and the U.S. ETF market, Research magazine sat down with Bill Belden, managing director, head of product development and management at Guggenheim Funds. Excerpts of the interview are below.
What changes should investors expect by combining Guggenheim Funds and Rydex SGI ETFs under the Guggenheim brand?
We’re excited about the prospects of our combined ETF businesses, and over time, the Rydex ETF products will be rebranded to Guggenheim. Our product lines are very complementary to each other and together, we’re better positioned than ever to deliver a broad array of strategic and tactical investment options to investors that can potentially improve their portfolio performance.
For example, the strength of the equal-weighted suite of ETFs at Rydex, combined with the Guggenheim lineup of emerging market exposures, delivers a powerful combination of equity strategies covering the globe. Add the unique and innovative Guggenheim BulletShares ETFs and the 10 Rydex CurrencyShares products, and you’ve got the building blocks for a great ETF lineup. Beyond that, however, Guggenheim Investments’ longstanding ability to apply our intellectual capital to creating opportunity for clients enables our ETF business to deliver solutions that capitalize on these opportunities.
What is the basic strategy behind the BulletShares and who might they appeal to?
The market has long delivered products — mutual funds, UITs, SMAs, ETFs, etc. — that provide investors an avenue through which they can obtain fixed income exposure. While these packaged products offer benefits over holding individual bonds, a significant number of investors are willing to take on the additional risks associated with investing in individual bonds. Seeing this caused us to ask the question, “What do individual bonds provide that is not obtained through traditional fixed income packaged products?”
We believe the answer is permanence and definition — an anticipated yield to maturity when purchased, a prescribed date of maturity at which time a final distribution is made to the holder, a continually declining duration and the ability to fine-tune or specifically target maturity exposure. This premise served as the basis for developing the Guggenheim BulletShares ETFs. Based upon a simple concept, a product that provides an investment and cash-flow profile similar to holding an individual bond, BulletShares ETFs are able to do that while also providing the benefits and advantages inherent in an ETF — exchange listed, diversified, transparent, tax efficient, etc.