More on the New Claymore ETFs

Includes: AZN, GSK, NVS
by: Roger Nusbaum

Roger Nusbaum submits: More information about the new WisdomTree foreign sector ETFs showed up on the website in the last day or two. To get yield information you need to look at the page for the index and not the fund.

There is one quirk with all of them that jumped out first that should be understood, which is that they exclude Canada. I was told that the funds generally target MSCI EAFE which also excludes Canada. I seem to remember hearing something different about why no Canada, but regardless of why, know that it is excluded.

I was a little disappointed by the yields. They, as a group, clearly yield more than the existing sector ETFs. Here are the yields:

Basic Materials 2.87%
Communications 4.48%
Consumer Cyc 3.86
Consumer Non-Cyc 2.61%
Financials 3.54%
Healthcare 1.90%
Industrials 2.93%
Tech 1.68%
Utilities 5.03%

Another fun little oddity is that the Consumer Non-Cyclical Fund (DPN) has a big weighting towards healthcare. There is at least 27% (this number only taken from the top ten) in healthcare. The total weight of the top ten is 46.5%. The largest stock is GlaxoSmithKline plc (NYSE:GSK) at 9.45%, AstraZeneca plc (NYSE:AZN) is #3 at 4.98%, and Novartis AG (NYSE:NVS) is fourth at 4.88%. I have a vision of the Vince Lombardi clip that they show on ESPN every so often where he is pacing around and yelling "what the hell is goin' on around here?"

Claymore has a fund in the works that will be called the Defensive Fund, or something similar, that will look like DPN, albeit with domestic names, that will invest in stocks that should do well during an economic down turn. It is a neat idea, but that last sentence is all I know about it. The WisdomTree fund in question here, DPN, seems like it will be a foreign version of that, and not a true consumer non-cyclical fund.

If you are curious, healthcare, as measured by iShares Healthcare (NYSEARCA:IYH), has 0.68 correlation to consumer non-cyclical as measured by the Staples Sector SPDR (NYSEARCA:XLP). So for now I am a tad puzzled by the DPN.

I'll have more on these in the next couple of weeks.

Comment on this article