Claymore's New Country Rotation and International Yield Hog ETFs

Roger Nusbaum submits: Claymore launched two new ETFs yesterday that on the surface look interesting. One of the two looks very unique, while the other one looks like a different twist on an existing theme.

The first one is the Country Rotation Fund (CRO). The idea is to pick countries, presumably from the EAFE basket as EAFE is the benchmark, that it feels offer a better risk/return profile based on some sort of undisclosed process. Then it picks stocks based on some sort of relative value/corporate growth model that is not spelled out very clearly.

The UK is the largest country weight at 25%, followed by Australia at 12%, a bunch more between 4.5% and 10% followed by a 0.17% in Ireland. The country selection includes macro economic factors, so I am surprised how little weight Ireland has, and more surprised that Norway has no weight.

It is easy to be skeptical of a rotation fund, but the other fund like this that rotates domestic sectors, Claymore/Zacks Sector Rotation ETF (XRO), has clocked the S&P 500 since its inception. It's up abut 22% compared to SPX's 15%. It has only been ten months or so, but when a "gimmick" fund with a great back test lives up to its own hype, it is tough to expect it to do better than great.

The other fund is the International Yield Hog (HGI). It is heaviest in the UK at 18%, U.S. 11%, Canada 8% and plenty of other countries with smaller weights. Like the domestic Yield Hog, which I own for a couple of folks, it goes to all sorts of different products to get yield: it owns stocks, CEFs, Canadian Trusts, MLPs and emerging market ADRs.

The hog strategy has worked fairly well since the domestic inception. It has lagged the S&P 500 by about 4%, but has beaten iShares Dow Jones Select Dividend ETF (DVY), which I own for a few clients, by about 3%. You can decide for yourself whether that equates to success.

The idea of high-yielding foreign was first introduced in an ETF from PowerShares with PowerShares International Dividend Achievers (PID). Since then, WisdomTree came out with a bunch of funds and Barclays just listed its EPAC Dividend Fund (IDV). I might be forgetting one or two more.

Neither fund has exposure to Japan which could allow them to pull away from EAFE, if Japan continues to struggle. CRO is very heavy in the financial sector, but surprisingly HGI is not.

One weird thing about the release of these funds is that there appears to be no published back test -- at least I didn't see one in the spot where they put the back test results for the other funds.

Claymore has cranked out a lot of funds lately, and a lot of them strike me as gimmicks, but it seems to me that they deliver more often than not -- which makes thinking of them as gimmicks unfair. Obviously I have no idea how either of these will do. I tend not to buy ETFs right out of the chute, and I am holding off here too -- but these are worth watching.