Claymore to Liquidate 11 of Its Least Popular ETFs

In a surprising move, Claymore Securities announced Friday that it would liquidate 11 of its least-popular ETFs.

The last day of trading for the funds will be February 19. On February 28, shareholders of record will receive cash payments for the full value of the funds. Any capital gains or losses from the portfolio will be distributed as well.

The funds being liquidated are:

• Claymore/BIR Leaders 50
• Claymore/BIR Leaders Mid-Cap Value
• Claymore/BIR Leaders Small-Cap Core
• Claymore/Robeco Boston Partners Large-Cap Value
• Claymore/LGA Green
• Claymore/KLD Sudan Free Large-Cap Core
• Claymore/Clear Mid-Cap Growth Index
• Claymore/Zacks Growth & Income Index
• Claymore/IndexIQ Small-Cap Value
• Claymore/Robeco Developed World Equity
• Claymore/Clear Global Vaccine Index

"We're always monitoring our funds to see what is being accepted by the marketplace," said Christian Magoon, who heads up the ETF group at Claymore. "For some reason, these products just didn't get traction.

"We view it as, ‘the marketplace has spoken.'"

Magoon was quick to point out that Claymore did not base its decision solely on assets, and indeed, the 11 funds are not the 11 smallest funds in the Claymore family (see table below). Instead, Magoon said that Claymore looked both at quantitative factors (like performance against competing funds) and qualitative factors (like how products were being received by investors, advisors and ETF analysts).

Magoon called it a process of "natural selection."

The liquidations could raise concerns among shareholders of other low-asset ETFs. Liquidations are generally bad news for shareholders: Although they get their money back, liquidations can create an unwanted taxable event. Moreover, funds sometimes generate capital gains as they sell out their portfolios, and those gains are distributed to shareholders.

"It will be viewed as an unpopular decision by some, but we feel that we're doing our duty," said Magoon. "We decided that it was not in the best interests of shareholders to have funds that were not being accepted by the marketplace."

Claymore says it has no plans to liquidate additional ETFs at this time, although it would not rule that out long term. Magoon said that the decision to close 11 funds at once was made to send a decisive signal that Claymore had evaluated its entire portfolio and made all the fund closings it wanted at this time.

The Claymore announcement marks the first ETF liquidations since 2006, when the SPDR O-Strip (OOO) ETF was eliminated due to low assets. Many have been anticipating a new wave of ETF liquidations to occur this year, following the rash of product launches in 2007. Of the 650 ETFs on the market as of January 25, 2008, 130 had less than $10 million in net assets.

Magoon said that Claymore will continue to grow its product line. The company recently launched a small-cap China ETF, and has a number of fund launches on tap for February.

Twenty Smallest Claymore Funds By Assets - 12/31/2007 (Funds In Bolded Italics Are Being Liquidated)
Fund	Ticker	Inception	Assets ($US millions)
Claymore/LGA Green ETF	GRN	12/15/2006	5.1
Claymore/Robeco Developed World	EEW	3/1/2007	5.1
Claymore/Robeco Developed Int'l	EEN	3/1/2007	5
Claymore/Zacks Country Rotation	CRO	7/11/2007	5
Claymore/Great Comp Large Growth	XGC	4/2/2007	4.8
Claymore/Clear Global Vaccine	JNR	6/27/2007	4.7
Claymore/Morningstar Manufacturing Super Sector	MZG	8/22/2007	4.1
Claymore/BDD High Income	LVL	6/25/2007	4
Claymore/Morningstar Information Super Sector	MZN	8/22/2007	3.9
Claymore/KLD Sudan-Free Large Core	KSF	6/25/2007	3.6
Claymore/Morningstar Services Super Sector	MZO	8/22/2007	3.6
Claymore/Zacks Dividend Rotation	IRO	10/24/2007	3.4
Claymore/Ocean Tomo Growth	OTR	4/2/2007	2.8
Claymore/Clear Mid-Cap Growth	MCG	4/26/2007	2.5
Claymore/BIR Leaders 50	BST	4/2/2007	2.4
Claymore/Zacks Growth & Income	CZG	4/2/2007	2.4
Claymore/BIR Leaders Sm Core	BES	4/2/2007	2.3
Claymore/Robeco BP Large Value	CLV	6/28/2007	2.3
Claymore/IndexIQ Small Value	SCV	4/26/2007	2.1
Claymore/BIR Leaders Mid Value	BMV	4/2/2007	1.2

Written by Matthew Hougan

Comments

[User 86999]

Ah, good riddance, the ETF space is much too cluttered!

[reph]

Yeah.. glad to see the death of some of the wanna-be-SPY products. How about more commodity or international ETFs, instead of yet more overpriced US equity ETFs that correlate highly w/ existing products?