While Claymore has introduced some novel ETFs, plain-vanilla indexers such as myself have been content to give their offerings a wide berth. But, Claymore’s two new offerings, reported by Rob Carrick in The Globe and Mail, are certainly worth checking out.
The Claymore Premium Money Market ETF, which invests in a mix of T-bills and short-term instruments, will begin trading on Feb. 19. The MER is 0.25% and the ETF is positioned as a competitor for money market mutual funds, which typically charge a MER of 1%. It’s not clear to me that there are any advantages to the Money Market ETF. Investors with a smaller cash balance will stick to mutual funds because it is unlikely that the MER advantage of the ETF will overcome the cost of commissions to buy and sell. And those with larger cash balances could do as well or better with cashable GICs.
The Claymore 1-5 Yr Laddered Government Bond ETF (ticker symbol: CLF) is more interesting because it competes directly with the iShares CDN Short Bond ETF. As the name suggests, the ETF holds equal amounts of provincial, federal and agency bonds maturing in 1 to 5 years for an attractive MER of 0.15%, which is 10 basis points cheaper than XSB.
However, I am in no rush to sell XSB because the higher yield (due to corporate bond holdings) will more than wipe out the MER savings of switching to CLF. Still, Claymore should be applauded for introducing more competition in the ETF arena. On my wish list is a competitor to XRE, which at 0.55% is usurious by ETF standards.
