Tired of Investing in the Same Countries All the Time?
Then rotate them with Claymore/Zecks Country Rotation ETF (CRO).
Last month, Claymore Securities launched a new international ETF that tracks Zecks Country Rotation Index (ZAXCR). According Zecks Investment Research, the index uses countries that are components of the MSCI EAFE Index. Currently, the index consists of 200 stocks from countries, including Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
Unlike other ETFs such as iShare MSCI EAFE Index (EFA) which invests in all the member countries at the same time, CRO, via the underlying index ZAXCR, selectively invests in countries based on the Zecks quantitative methodology which identifies and weighs countries, as well as stocks within those countries, that offer the greatest risk/return prospective. Such an approach is “specifically designed to enhance investment applications and investability.” Every six months, the index will be rebalanced to reflect the change of the economic environment. As of July 3, 2007, the country weightings (PDF file) are as follows:
- United Kingdom: 25.00%
- Australia: 12.83%
- Hong Kong: 10.67%
- Switzerland: 9.00%
- Sweden: 8.33%
- Spain: 8.33%
- Singapore: 7.50%
- Italy: 6.83%
- Belgium: 5.33%
- Austria: 4.50%
- Netherlands: 1.50%
- Ireland: 0.17%
The fund has an expense ratio (ER) of 0.65%.
Since the fund has been around for only a month, whether it can deliver the superior return it promised remains to be seen. However, another Claymore fund that employs the same quantitative methodology from Zecks may serve as an example of how the method performs. The Claymore/Zacks Sector Rotation Fund (XRO), launched on September 21, 2006, has a year-to-date return of 5.88% and since its inception, the fund’s NAV has increased from $24.80 to $29.37.
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