An ETN of CEF’s is Here

Claymore Securities is offering an exchange traded note (ETN) tracking 75 closed-end funds (CEFs). The Claymore CEF Index-Linked GS Connect (GCE) is backed by Goldman Sachs and began trading last week. A CEF trades like an ETF all day on exchanges, however, they have a set number of shares. An ETN are unsecured IOUs that promise to pay returns on a given index or currency. Trang Ho for Investor’s Business Daily reports that the major advantage of buying an ETN is that there should not be tracking error and the risk is with the creditor.

CEFs are actively managed like a mutual fund. Managers use tools to leverage and boost returns. The index for GCE is weighted at 40.65% fixed-income, 30.4% in global equity, and 27.84% in domestic equity funds.