As is the case with any equity-based ETF, CSD’s sector weights are important, but even more so when studying which sectors have a tendency to turn out the best and worst spinoffs. A recent Wall Street Journal article notes the energy sector has a penchant for spinoff duds, but consumer sectors and health care deliver rewarding spinoffs.
Looking ahead to 2015, there is of course a chance CSD will rebound with much of that chance being predicated on the broader market’s whims. CSD’s positive traits include a favorable sector mix, namely a combined 39.3% weight to discretionary and health care stocks. [Spin-Off ETF Looks for Upside]
“CSD is in the top 1% of Morningstar’s mid-cap blend category for the trailing 3- and 5-year periods ended 12/31/2014. The number of U.S. company spin-offs is expected to reach a 30-year high in 2015,” according to Guggenheim.
This year is likely to be an even larger year for spinoffs than 2014. There are already 41 spinoffs planned compared to 36 at the same time in 2014, according to Spin-Off Research.
Guggenheim Spin-Off ETF