November 22, 2006 at 1:01 am by Tom Lydon
Sponsors of exchange traded funds (ETFs) are getting creative in the type of ETFs they create. Claymore/Zacks Sector Rotation (XRO) is a good example. Roger Nusbaum in TheStreet.com explains that the index overweights sectors with the potential to outperform the S&P 500.
XRO rebalances every quarter, which could give an investor more exposure to a sector than they want for their portfolio. Cycles don’t change significantly every three months, but there is the chance that the make up of the ETF could change. The ETF does focus on the largest 1,000 companies, so you know the allocation is large-cap.
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