Tired of Investing in the Same Countries All the Time?

croThen 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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4 Responses to “Tired of Investing in the Same Countries All the Time?”

  1. George |  Aug 09, 2007 at 10:38 pm

    Sun,

    Wanted to write and congratulate you on your dedicated and informative blog. I have been a avid reader of your blog for the past 6 months and have thoroughly enjoyed your insight. Thanks to you I am motiviated to get my own finances in order, track my networth and make some key investments.

    George

  2. Sun |  Aug 17, 2007 at 10:53 pm

    While I write about what I am doing financially most of the time, there are still a lot for me to learn and I am sure I made many errors in writing those posts. Some probably don’t make sense. If you see anything that doesn’t seem to be right, please do let me know. I will be very happy to hear your feedbacks.