UEM: Most Diversification Possible in a Single Fund

I respect Roger Nusbaum's stance over the newly issued Claymore Capital Markets ETF (UEM), and since he is an active portfolio manager I understand his disagreement with its passive approach, but as an average investor i see things from the other side of the barricade and think instead it was about time such an offering came to light.

By allowing exposure to the entire capital markets in one fund, you are now able to effectively apply an indexing strategy to your ETF portfolio without even the need to do the rebalancing between assets, since the index publisher, Dorchester Capital Management, does it for you at the end of each month.

David Jackson has already made the case for indexing and I guess that even Benjamin Graham, the author of "The Intelligent Investor" which is considered by Warren Buffett as the "best book on investing ever written", would warmly welcome this new offer from Claymore and would probably consider it a sort of buy-and-forget security around which to build a sound ETF portfolio.

For example, now a simple 3-ETF cocktail made of 60% UEM, 30% VEA and 10% VWO presents the layman investor the opportunity to build a well diversified and balanced portfolio with exposure to roughly all the major stocks traded around the world plus the safety and income offered by high grade bonds and T-bills; i am already considering replacing both my BND and VTI holdings with this new smart tool.

My take is that in the future, while we will still see new exotic and specific offerings from the ETF issuers, the scenery will start expanding on the other side as well, and i deem UEM to be the pioneer of a new offspring of ETFs bearing the hallmark of the broadest diversification and balancing possible in a single product, with the ultimate goal of replacing the whole mutual fund industry.

Disclosure: author is long VTI and BND.

Comments

[DrBagel]

I agree that UEM has some value. It is close to being a moderate growth asset allocation ETF. I wonder if risk targeted asset allocation ETFs are on the horizon.

[dunn]

check out a new fund ASAFX