HardAssetsInvestor

Written by Lara Crigger  |

May 22, 2009

Commodity Equity ETFs Get Active. What About Futures?

Details

The filing for active commodity equity funds from Claymore has some asking when active commodity futures ETFs will appear.

• Claymore vs. its competitors in the equity space
• CTAs and active futures
• What about the Barclays Hedge Index

 

With the recent flurry of news surrounding actively managed ETFs news, it was only a matter of time before the trend eventually hit commodities.

Last week, Claymore Securities filed to launch three new actively managed commodity equity ETFs: the Claymore Delta Global Infrastructure Fund, the Claymore Delta Global Hard Assets Fund and the Claymore Delta Global Agribusiness Fund.

Claymore's new funds are all equity-based. They are not the first actively managed ETFs filed with the SEC - indeed, quite a few such funds are already trading - but they are distinguished by being truly active in the traditional (read: qualitative stock-picking) sense. While most "active ETFs" follow a quantitative strategy, the new Claymore products will have at least 80% of their constituent stocks chosen using traditional qualitative methods by the funds' subadviser, Delta Global Advisors.

For all three of the funds, Delta Global will pick companies with a minimum $400 million market cap, selecting stocks using "a top-down approach to global markets and the infrastructure-related sub-sectors, along with a bottom-up approach to individual companies."

To get a better understanding of Claymore's new equity-based funds, let's take a look one by one:

 

Claymore Delta Global Infrastructure Fund

If approved, Claymore's infrastructure fund would capitalize on two hot themes - infrastructure and emerging markets - by seeking out companies involved in the developing world's building boom.

According to the filing, this includes miners, basic materials suppliers, utilities, telecoms, infrastructure engineers, water infrastructure, and road, rail, port and airport builders and operators.

Claymore's new ETF will be squeezing into an already crowded field of global infrastructure funds, including the SPDR FTSE/Macquarie Global Infrastructure 100 ETF (NYSE Arca: GII), the First Trust ISE Global Engineering and Construction Index Fund (NYSE Arca: FLM), the PowerShares Emerging Markets Infrastructure Fund (NYSE Arca: PXR) and the market's 800-lb gorilla, the iShares S&P Global Infrastructure Index ETF (NYSE Arca: IGF).

So far, IGF has accumulated $248.9 million in assets as of May 18, dwarfing its competitors. It also offers a diverse range of sectors: 41% of its holdings are industrials, 37% are utilities and 20% are energy companies.

But IGF has a high concentration in U.S. companies (22.49%). If Claymore can offer a more global approach, it could give IGF a run for its money.

 

Claymore Delta Global Hard Assets Fund

Meanwhile, for Claymore's active Hard Assets fund, Delta Global would invest in companies that stand to benefit from fluctuations (both up and down) in hard commodities prices. According to the filing, that includes those that mine, process and sell hard commodities, like precious metals, base metals, energy and energy services.

"Hard commodities" include a full range of metals - everything from gold and silver to copper and zinc - as well as natural gas, coal and even uranium.

Again, the fund faces competition from the current players in the market, including the iShares S&P North American Natural Resources Sector Index ETF (NYSE Arca: IGE) and the Van Eck Market Vectors RVE Hard Assets Producers ETF (NYSE Arca: HAP).

With $1.3 billion in assets, IGE has already gained a solid foothold in the market. However, the fund overwhelmingly invests in companies dealing with oil, gas and consumable fuels (64.9%), making it susceptible to the recent downward movements in oil prices.

HAP, on the other hand, promises broader, "one-stop shopping" for global hard assets distributors and producers, and even includes renewable energy stocks such as water and solar. But the fund has remained relatively small, with only $22.5 million in assets as of May 19.