Claymore in partnership with Zacks has launched a country rotation exchange-traded fund that poses a challenge to the most popular international index and ETF, the iShares MSCI Europe, Australia and Far East Index (NYSEARCA:EFA).
The Claymore/Zacks Country Rotation ETF (CRO) seeks to track the Zacks Country Rotation index comprisesed of stocks selected from a universe of international companies based in countries included in the MSCI EAFE Index and Canada, with the exclusion of companies based in Greece. The companies in the universe are selected using a proprietary methodology developed by Zacks Investment Research.
The EFA exchange-traded fund weights countries in the index by the market value of their respective stock market. Therefore, Japan and the United Kingdom account for 46% of the exposure in the ETF basket.
One flaw in the new Claymore/Zacks ETF is that it excludes all of the fast growing and top performing emerging market countries. Emerging market countries account for 85% of the worlds population, 25% of global economic output and represent 50% of 2007 economic growth. Compared to only a few years ago, many of these countries have higher foreign exchange reserves, lower foreign debt, lower inflation, higher credit ratings and have as a group achieved average economic growth rates of 7.7% during the last four years.