New Oil Sands ETF from Claymore

Roger Nusbaum submits: Claymore has an oil sands ETF in the works. More information can be found at OilSandsIndex.com.

The graphic below shows the companies in the index, but I could not find how the companies are weighted. It does say that the top ten comprise 74.9% of the fund, the largest (but seemingly unnamed) holding is 10.9% of the fund (click to enlarge):

This was supposed to come out in Canada when Claymore listed its other ETFs last month, but seems to have been delayed and I have not been able to find a reason why nor have calls to Claymore been returned.

They may have pulled it because of the correction underway in energy stocks, but that is a guess on my part.

I think the theme is very important for the next ten years even if it does poorly for a few months now.

If anything comes of this I will post more about it.

Comments

[Derek Gates_:]

I wanted to provide some more information concerning the Claymore Oil Sands ETF that Roger Nusbaum mentioned in his blog on Oct 5, 2006: energy.seekingalpha.co....

The ETF should begin trading by mid October under the symbol CLO on the Toronto Stock Exchange. Claymore has been working with market makers to ensure that the ETF will have wide institutional support and liquidity.

The oil sands index consists of the 17 companies mentioned in Mr. Nusbaum blog that were selected based on the following characteristics:

Must be Canadian based Oil Sands Producers
Must have a minimum market cap of $500 MM (CAD)
Must trade a minimum of $2 MM/day in share value
Must have an estimated 25,000 boe/day production by 2015
Must have at least 35% of all energy production coming from Canada's oil sands by 2015.

The allocation of the individual companies is based on a proprietary formula that puts greater weight on the oil sands producers that are pure plays, have strong growth plans and have current production. Liquidity and market cap also help determine the asset allocation of the index.

The index was designed to capture the appreciation of the oil sands during the high growth phase anticipated in the next 10 to 15 years and the Claymore ETF will give institutional and retail investors a great tool for buy and hold, hedge funds arbitrage and day tradering strategies.

As a final note, the recent pullback in the energy sector and the oil sands in particular is creating an excellent buying opportunity for investors. Short term traders should consider that the index typically has a strong 35 to 60% bounce after a drop of 20% or more. The current drop of 80+ points or 26% on the index qualifies as the largest decline since inception of the index on June 30, 2004. Also, most drops in the index occur during the spring and fall months which means that the current seasonal pattern should soon revert to a positive trend. Long term investors should consider that this is the best entry point for the index since the summer/fall of 2005 and that the index is near its long term support trendline. Overall, the fundamentals of the oil sands producers remain strong as their major operating cost, natural gas, remains low and crude oil prices remain well above the breakeven costs of most oil sands producers in the $28 to $35 range.

For more details on the index you can visit the index website at oilsandsindex.com. The website provides monthly commentary, recent newspaper and TV interviews on the index, historical chart, monthly performance statistics and index methodology.

Regards,

Derek Gates, CFA
President, Sustainable Wealth Management Ltd.
Founder of the Oil Sands Sector Index
Bloomberg: SOSSI

2006 Oct 07 03:22 PM