One year after the market hit its lows, Claymore Securities, often best known as a provider of themed exchange traded funds (ETFs), is taking a different approach with three new offerings that track broad U.S. equities.
Claymore’s three new funds are:
- Wilshire 5000 Total Market Index (NYSEArca: WFVK): Tracks the Wilshire 5000, the only index that holds every single stock trading in the United States today. The expense ratio is 0.12%.
- Wilshire 4500 Completion Index (NYSEArca: WXSP): For investors who already have access to the S&P 500, this ETF gives exposure to the remainder of the market. The expense ratio is 0.18%.
- Wilshire U.S. Real Estate Investment Trust (NYSEArca: WREI): Tracks the Wilshire U.S. Real Estate Investment Rust Index, which launched in 1991. It provides pure exposure to the REIT marketplace and excludes other types of real estate securities. The expense ratio is 0.32%. [Homebuilders Surge Ahead.]
William Belden, Claymore’s managing director, says these new offerings help take Claymore’s product line in a new direction and expands on where the provider has already been. “We’re happy with what we’ve done, and we’ll continue to be opportunitistic,” but having more core offerings will help round out the product line and further appeal to advisors.
The indexes on which the ETFs are based are being called “pure and complete” – that is, indexes built to give pure exposure to various markets without artificial parameters in place.
Robert Waid, Wilshire’s managing director, said he sometimes refers to the Wilshire 5000 as a “third-generation” market index, following the Dow Jones Industrial Average and the S&P500. The index was born in 1974 after its creators looked at the S&P 500 and determined that a better measure of the market was needed.
To give a sense of how the technology has changed, in 1974 it took about 40 minutes to calculate the values of the securities in the index; today, it’s done in mere seconds.
The Wilshire 5000 is a cap-weighted index, meaning that the largest companies are weighted the heaviest. The only criteria a stock has to meet to be included in the index is to trade on a U.S. exchange. There are no cutoff points concerning size, trading volume or share value. There are no nods toward certain sectors, either. [More on Indexing Here.]
“We didn’t create these indexes to fit some marketing spiel or to be publicly traded; we created these indexes to serve as benchmarks” so people could see how they’re doing, as well as to get a sense of how the market is looking.
And 5000 may be in the name, but there aren’t necessarily 5000 stocks in the index. Waid says that when they were building the index in 1974, there were close to 5000 securities trading, so they rounded up and the name stuck as the number of stocks in the United States ballooned to 7,600 in 1998 and shrank down to 4,100 today. Companies are added monthly.
For more stories about new ETFs, visit our new ETF category.
Read the disclaimer, as Tom Lydon is a board member of Rydex|SGI. Both Claymore and Rydex|SGIO are owned by Guggenheim Partners.