Exchange traded fund (ETF) provider Claymore Securities announced that it’s closing down one of its most popular funds, Claymore/Delta Global Shipping (NYSEArca: SEA). But don’t fear – the market may not be without a shipping ETF for long. Find out why and what’s next for the provider after the jump.
After Claymore was acquired by Guggenheim last October, there was a change in control of the funds Claymore managed. Claymore Managing Director Bill Belden explained that under the 40 Act rules, a change in control means going to proxy shareholders and getting approval for that change for all ETFs and closed-end funds (CEFs). [Read More About the Claymore/Guggenheim Deal.]
Belden says all funds received approval, with the exception of SEA, “Despite our strenuous efforts to get that vote.”
With that, Claymore closed the fund yesterday and is liquidating now with proceeds going to the fund’s shareholders. Normally, when an ETF closes, there’s an announcement followed by a period of a few weeks before trading ceases and liquidation begins. In this instance, that wasn’t possible because although the provider preferred to do a more deliberate unwinding of SEA, Claymore was no longer authorized by the SEC to serve as the investment advisor to the product. [The ETF Closing Process.]
But investors who want exposure to the shipping sector may not have long to wait.
As SEA ceased trading and liquidation began, Claymore filed with the SEC to launch a new shipping ETF that’s largely similar to SEA. The fund’s name will change to Claymore Shipping (SEA). It will track the same index – the Delta Global Shipping Index and carry a 0.65% expense ratio. [Top ETFs to Play Growing Industrial Activity.]
“We’re working with the SEC to see that the time out of the market is kept to a minimum,” Belden says.
No doubt investors will be eager to add SEA back into their portfolios once the new fund launches. SEA closed with about $131 million in assets and was one of the year’s top performers, up 22.4% since January. It launched in September 2008 and is a unique way for ETF investors to get exposure to the shipping sector. [5 ETFs Beating the S&P 500.]
SEA is also a unique way to get exposure to the global economic recovery. Newly-crowned middle class residents of emerging markets are buying more goods while exporting countries like China are heavily utilizing shipping to import raw goods and export finished products.
For more stories about the shipping sector, visit our shipping category.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI, which is owned by Guggenheim.