Patent ETF Trades Under Radar

Includes: GOOG, MSFT, OTP
by: Tom Lydon

Exchange traded funds (ETFs) run the gamut, from your plain vanilla offerings to your esoteric funds tracking obscure indexes. One fund in particular that’s trading these days is a member of the latter class.

The Claymore/Ocean Tomo Patent ETF (NYSE:OTP) is a fund that is interesting in theory and may hold promise in the future. Everyday Finance reports on Seeking Alpha that OTP focuses on companies that hold “quality” portfolios of patents, which in turn, translate into higher earnings than peer companies and broad market indices as a whole.

Many of the top holdings in the fund are top-notch tech companies such as Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG), so the argument is still out on whether the fund is performing because of market performance or the heavy lean toward tech. The fund is up 47% in the last year, and 6.7% year-to-date.

The fund breaks down into technology, 36.5%; health care, 20.4%; and energy, 12.7%. OTP launched on Dec. 15, 2006, and has a 0.60% expense ratio.

Disclosure: No positions