“Having just 40 holdings is an advantage in this case. Since each presents an uncertain measure of risk, the diligent investor can stay ‘a step ahead’ by keeping up with companies and events which move the sector. Hence, the fewer the number of holdings, the more manageable it is,” according to a Seeking Alpha analysis of CSD.

Another catalyst for CSD is mergers and acquisitions activity, something that was on full display last year when H.J. Heinz acquired Kraft. Kraft was CSD’s largest holding at the time. In terms of sectors, healthcare usually produces the best-performing spin-offs.

“Another point of spin-off interest is Health Care and it follows along those same lines as large diversified industrials: the potential for spin-offs are in the company’s structure. Many global pharmaceuticals or simply personal care consumer products have those very broad based portfolios with company brands which take on a life of their own,” adds Seeking Alpha.

Guggenheim Spin-Off ETF