Claymore Files to Launch First Active Commodity ETF

By Murray Coleman

Claymore Securities has filed a request with the Securities and Exchange Commission to launch three new exchange-traded funds, each of which would be actively managed.

The proposed ETFs would be advised by Claymore Advisors and subadvised by Huntington Beach, Calif.-based Delta Global Advisors.

Rather than following an index and using a quantitative type of stock picking process, the ETFs would use more traditional actively managed styles similar to how mutual funds now operate.

Depending on the ETF, Delta Global would implement a bottom-up fundamental approach or rely on more technical analysis to evaluate companies. In some cases, both methodologies would be used to select stocks.

The ETFs which Claymore is asking regulators to approve are the:

• Claymore Delta Global Infrastructure ETF.

• Claymore Delta Global Hard Assets ETF.

• Claymore Delta Global Agribusiness ETF.

Delta Global's indexing arm has already created the benchmark that's used for the Claymore/Delta Global Shipping ETF (NYSE: SEA).

Play On Infrastructure In Emerging Markets

The new infrastructure ETF would include stocks its managers believe are best-positioned to benefit from growth of infrastructure projects in emerging markets. As explained in the filing, those would include: utilities, ports, airports, roads, railroads, water infrastructure and telecom build-outs. The portfolio would also invest in expansion relating to rising demand for basic materials and general engineering projects along more general infrastructure levels.

The case for investing in the field isn't exactly new. In fact, there has been much debate about whether "infrastructure" is simply a way to reinvent utilities as a more trendy global sector. (See related analysis on the actual role and nature infrastructure companies play in world markets here.)

Currently, some four pure-play infrastructure ETFs are being offered. All are index-driven. Three take a global view:

• The First Trust ISE Global Engineering and Construction Index Fund (NYSE: FLM) takes a different tack by de-emphasizing utilities. Those types of companies tend to dominate infrastructure markets, especially in smaller countries. (See related story here.)
• The iShares S&P Global Infrastructure Index (NYSE: IGF) was the second ETF in this space but has attracted the most assets. (See related story here.)
• The SPDR FTSE/Macquarie Global Infrastructure 100 ETF (NYSE:GII) was the first in this category. But it has attracted just slightly more than $61 million in assets so far. (See related story here.)

The most direct competitor to the new Claymore actively managed fund would appear to be the PowerShares Emerging Markets Infrastructure Portfolio (NYSE: PXR). It's a concentrated portfolio that's thinly traded. And it has less than $24 million in assets, although it debuted in November during terrible market conditions.

By contrast, IGF has more than $200 million in assets and is about half the cost (0.48% vs. 0.75%). But it also is lightly traded and, by far, has its biggest concentration in U.S. names.

Since getting a pop earlier this year when the Obama administration took over the White House, the global infrastructure ETFs have been settling around broader market trends. Going back to the past 12 months, they've been lagging.

But that's not the case for PXR. It was up more than 27% heading into Friday. By comparison, the SPDR S&P 500 Trust (NYSE: SPY) was up about 1.40% and the broadly diversified iShares MSCI Emerging Markets Index (NYSE: EEM) was ahead by 22%-plus.

The big question with the new active Claymore ETF will be whether active management can really prove, over time, to be more effective than PXR's index-based approach. (See related story on how PXR's underlying index is constructed here.) Pricing will also no doubt play a significant role -- will the new ETF undercut the PowerShares more passive version by much? And if so, will it be enough to give Delta Global an advantage right out of the gates?

Hard Assets ETF Also Faces Competition

According to the filing, the Hard Assets fund will invest in "securities that derive their revenues from the mining, processing and sale of hard commodities." Those will include precious metals, base metals, energy and energy services.

The mix will be what's interesting. Delta Global will use a combination of fundamental and technical analysis in its selection processes for its ETFs. It's described as a top-down approach, focusing on commodities sectors and global markets. The fund will invest in companies with market caps of $400 million or more, making it a more all-caps-styled approach.

Commodities included in the portfolio are expected to be: gold, silver, platinum, copper, nickel, zinc, oil, natural gas, coal and uranium. But the filing makes it clear that more can be added at the manager's discretion. Stocks representing those types of commodities will be selected within three general categories: industrials, materials and energy.

With that sort of a broad base of companies, the new ETF might offer some competition to the Elements Rogers International Commodities ETN (NYSE: RJI). That's the most diversified on the market now in terms of breadth and sheer numbers of different sectors as well as industries covered. It's based on an index created by Jim Rogers.

However, the ETN ran into liquidity problems recently when its underlying issuer, the Swedish Export Credit Corp., had to restate earnings. It had to stop issuing new shares of the ETN, which left it acting more like a closed-end fund. (See related article here.)

Other index-based rivals to a new Claymore active Hard Assets ETF could come from a trio of other relatively diversified existing portfolios: the Barclays iPath ETN (NYSE: DJP); the iShares S&P GSCI Commodity (NYSE: GSG) and the iPath S&P GSCI Total Return ETN (NYSE: GSP).

(For a comprehensive review of commodities ETFs and ETNs, see related article from the Exchange-Traded Funds Report here.)

Global Agriculture In Real Time

Interestingly, this proposed ETF would take a bottom-up approach to picking stocks. The fund would "invest in securities that derive from the growing, selling, processing and/or trading of a broad spectrum of agricultural commodities, seeds and chemicals ..."

Commodities represented in the fund would include: corn, soybeans, wheat, sugar, palm oil, cotton, oats and fruit. It can also invest in companies involved in edible oils used as bio-fuels.

The most direct competitor to the new active ETF in this category could come from the Market Vectors RVE Hard Assets ETF (NYSE: HAP). It also invests in stocks rather than futures contracts. HAP launched last September in an effort to reshape the natural resources investing landscape. It was billed as the first global pure-play hard assets ETF to hit the market. (See related story here.)

No expense ratios were listed for these new ETFs in the filing. But for other details included, you can find the full document here.

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