# Claymore Balanced Income CorePortfolio™ ETF



## jshah (Dec 29, 2009)

Hi All

This is my first post so please ignore mistakes . I would like to get opinion of other members about this ETF.

It is around 50% Equity 50% Bond. its composition is
CLAYMORE GLOBAL MONTHLY ADVANTAGED DIVIDEND ETF (COMMON) 21.07 % 
CLAYMORE 1-5 YR LADDERED GOVERNMENT BOND ETF (COMMON) 19.62 % 
CLAYMORE S&P/TSX CANADIAN DIVIDEND ETF (COMMON) 18.03 % 
CLAYMORE 1-5 YR LADDERED CORPORATE BOND ETF (COMMON) 10.76 % 
ISHARES CDN DEX REAL RETURN 9.89 % 
CLAYMORE GLOBAL REAL ESTATE ETF (COMMON) 6.16 % 
CLAYMORE S&P/TSX CDN PREFERRED SHARE ETF (COMMON) 5.03 % 
CLAYMORE EQUAL WEIGHT BANC & LIFECO ETF (COMMON) 4.38 % 
ISHARES CDN S&P/TSX CAP REIT 3.21 % 
ISHARES COMEX GOLD TRUST -CAD 1.01 % 
CLAYMORE NATURAL GAS COMMODITY ETF 0.84 % 

Claymore allows monthly contribution without any commission and DRIP free of charge.

Please share your throughts 

Thanks


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## mogul777 (Jun 2, 2009)

If all you can do is buy one basic investment then it's ok. Couple of points one about the underlying "funds" and a second about the fund makeup. Their bond funds aren't actually laddered, they just roll them over. Second what's the point of investing .84% in anything? Commit to it or forget it. Wasted administration fees, but what do they care you pay the fees, lol.


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## HaroldCrump (Jun 10, 2009)

mogul777 said:


> Their bond funds aren't actually laddered, they just roll them over.


What does this part mean?


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## ssimps (Dec 8, 2009)

HaroldCrump said:


> What does this part mean?


I'd also like t know what the difference is.

Also, I think an issue with the ETF you mention is that it is an ETF of ETF's, so you are paying the top level ETF mer PLUS the underlying ETF mer's. If you have enough $ to buy some of the top % underlying ETFs directly so broker commissions don't kill you, you would likely be better off going that way.


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## leslie (May 25, 2009)

You should check Claymore's site for clarification, but I don't believe *"you are paying the top level ETF mer PLUS the underlying ETF mer's"* is actually correct. They reverse out the duplication. Only the 14% held in ETFs from another provider (iShares) would have duplication.


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## jshah (Dec 29, 2009)

leslie said:


> You should check Claymore's site for clarification, but I don't believe *"you are paying the top level ETF mer PLUS the underlying ETF mer's"* is actually correct. They reverse out the duplication. Only the 14% held in ETFs from another provider (iShares) would have duplication.



You are paying MER on top of underlying MER in this ETF which is around 0.25. (Ishare portfolio works different where MER reflects total MER which includes MER of underlying ETF)


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## jshah (Dec 29, 2009)

I wonder how difficult it is to sell Claymore ETF as there trade volume is low. Has anyone had experience in buying/Selling Claymore ETF 

Thanks


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## jshah (Dec 29, 2009)

HaroldCrump said:


> What does this part mean?



According to their website for laddered Corporate bond their holding are
# OF BONDS BUCKET 
5 1 yr - 1.99 yrs 
5 2 yrs - 2.99 yrs 
5 3 yrs - 3.99 yrs 
5 4 yrs - 4.99 yrs 
5 5 yrs - 5.99 yrs 

Let's look at 2 Yrs-2.99 category. After one year its remaining duration will be one year so it will be fit into '1 Yr category'. Every year they just have to buy 5 Yrs - 5.99 Yrs category.

That's the way I understand it. I am not sure whether Mogul is referring to the same fact or not


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## ssimps (Dec 8, 2009)

leslie said:


> You should check Claymore's site for clarification, but I don't believe *"you are paying the top level ETF mer PLUS the underlying ETF mer's"* is actually correct. They reverse out the duplication. Only the 14% held in ETFs from another provider (iShares) would have duplication.


When I called Claymore they confirmed what I said; even with the Claymore ETFs you pay the underlying MER plus the MER of the top level fund. Is there a statement on their site that says otherwise? 

If you call Claymore and get a difference response please let me know.

Thank you.


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## HaroldCrump (Jun 10, 2009)

jshah said:


> Let's look at 2 Yrs-2.99 category. After one year its remaining duration will be one year so it will be fit into '1 Yr category'. Every year they just have to buy 5 Yrs - 5.99 Yrs category.


Isn't that the same way an individual would build a bond ladder too? 
Or a GIC ladder, for that matter.
Once the ladder is set-up for the first time, subsequently always buy 5 year terms securities (GIC or Bonds).


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## jshah (Dec 29, 2009)

HaroldCrump said:


> Isn't that the same way an individual would build a bond ladder too?
> Or a GIC ladder, for that matter.
> Once the ladder is set-up for the first time, subsequently always buy 5 year terms securities (GIC or Bonds).



I guess so.


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## mogul777 (Jun 2, 2009)

HaroldCrump said:


> Isn't that the same way an individual would build a bond ladder too?
> Or a GIC ladder, for that matter.
> Once the ladder is set-up for the first time, subsequently always buy 5 year terms securities (GIC or Bonds).


No. A proper bond ladder involves buying a bond and holding it to maturity. Staggering the maturity dates of course makes it into a "ladder". The part that completely invalidates Claymore's funds is the fact that the bonds are *not* held to maturity. In essence it's identical to any "regular" bond fund... with some tricky marketing speak added in.


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## HaroldCrump (Jun 10, 2009)

mogul777 said:


> No. A proper bond ladder involves buying a bond and holding it to maturity. Staggering the maturity dates of course makes it into a "ladder".


That is my understanding as well.
If you are setting up a 5 year ladder, for example, you would always be buying 5 year bonds (or GIC) and holding each to maturity.
That way you are buying every year at the prevailing interest rates and simply "rolling over" a maturing bond/GIC to make the next purchase.


> The part that completely invalidates Claymore's funds is the fact that the bonds are *not* held to maturity.


You mean they are trading in and out of bonds? Why?


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## jshah (Dec 29, 2009)

HaroldCrump said:


> That is my understanding as well.
> If you are setting up a 5 year ladder, for example, you would always be buying 5 year bonds (or GIC) and holding each to maturity.
> That way you are buying every year at the prevailing interest rates and simply "rolling over" a maturing bond/GIC to make the next purchase.You mean they are trading in and out of bonds? Why?


I would also like to know 'source of information' that they are not holding them to maturity. 'http://www.claymoreinvestments.ca/etf/fund/clf' here they show a picture where it seems like to me that maturing bond is being replaced by new 5 year bond ladder. Though I am not able to find an explicit reference to this fact or otherwise


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## mogul777 (Jun 2, 2009)

jshah said:


> I would also like to know 'source of information' that they are not holding them to maturity. 'http://www.claymoreinvestments.ca/etf/fund/clf' here they show a picture where it seems like to me that maturing bond is being replaced by new 5 year bond ladder. Though I am not able to find an explicit reference to this fact or otherwise


Interesting I just searched through the literature and no where did I find an explicit reference to this, it's fully implied for those that can read between the lines. However, there are numerous articles and such from reputable sources that will explain the methodology for you. In this case Google is your friend. It's New Year's Eve for *^&% sakes I've got better things to do.


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## ssimps (Dec 8, 2009)

jshah said:


> I would also like to know 'source of information' that they are not holding them to maturity. 'http://www.claymoreinvestments.ca/etf/fund/clf' here they show a picture where it seems like to me that maturing bond is being replaced by new 5 year bond ladder. Though I am not able to find an explicit reference to this fact or otherwise


You could also call them to get clarification. I may also call, as I have a vested interest in this. Maybe we could both call and post the response we get to see if they match.

This is what I found reading the website and prospectus (well skimming the latter):

*From their website:*

"As the name suggests, a laddered bond portfolio is made up of several fixed income holdings, each having a successively longer term to maturity. Bonds close to maturity are reinvested back out at the long end (i.e. at the top of the “ladder”) which will result in continuous rolling of the portfolio."

What does "Bonds close to maturity" really mean, they have matured, or they are almost matured?

*Page 6 of prospectus:*

Claymore 1-5 Yr Laddered Government Bond ETF

The Claymore 1-5 Yr Laddered Government Bond ETF seeks investment results that correspond generally to the price and yield (before fees and expenses) of the DEX 1-5 Year Laddered Government Bond Index. The investment strategy of the Claymore 1-5 Yr Laddered Government Bond ETF is to invest in and hold Constituent Securities of the DEX 1-5 Year Laddered Government Bond Index in substantially the same proportion as they are reflected in that Index. The Claymore 1-5 Yr Laddered Government Bond ETF has been structured to provide exposure to the staggered maturity dates of the bonds in the underlying Index, which range from one to five years.

Claymore 1-5 Yr Laddered Corporate Bond ETF

The Claymore 1-5 Yr Laddered Corporate Bond ETF seeks investment results that correspond generally to the price and yield (before fees and expenses) of the DEX 1-5 Year Laddered Corporate Bond Index. The investment strategy of the Claymore 1-5 Yr Laddered Corporate Bond ETF is to invest in and hold Constituent Securities of the DEX 1-5 Year Laddered Corporate Bond Index in substantially the same proportion as they are reflected in that Index. The Claymore 1-5 Yr Laddered Corporate Bond ETF has been structured to provide exposure to the staggered maturity dates of the bonds in the underlying Index, which range from one to five years.

Page 15 of prospectus:


DEX 1-5 Year Laddered Government Bond Index

The DEX 1-5 Year Laddered Government Bond Index, is an equally weighted benchmark index that measures potential returns of a theoretical portfolio of Canadian treasury and corporate securities with a yield curve based upon five distinct annual maturities. The DEX 1-5 Year Laddered Government Bond Index seeks to maintain a continuous maturity laddered portfolio of approximately 25 securities, meaning that securities holdings are scheduled to mature in a proportional, annual sequential pattern.

DEX 1-5 Year Laddered Corporate Bond Index

The DEX 1-5 Year Laddered Corporate Bond Index is an equally weighted benchmark index that measures potential returns of a theoretical portfolio of Canadian corporate securities with a yield curve based upon five distinct annual groupings of maturity. The DEX 1-5 Year Laddered Corporate Bond Index seeks to maintain a continuous maturity laddered portfolio of approximately 25 securities, meaning that securities holdings are scheduled to mature in a proportional, annual sequential pattern.

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To me, the real question is, regardless of whether it is a true laddered fund or a simulated one, what is the difference to the investor? Are there no significant differences?


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## jshah (Dec 29, 2009)

mogul777 said:


> . It's New Year's Eve for *^&% sakes I've got better things to do.


No worries. Happy new year to you and all members of this forum


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## mogul777 (Jun 2, 2009)

jshah said:


> No worries. Happy new year to you and all members of this forum


Happy New Year!


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## mogul777 (Jun 2, 2009)

Ssimps, if you hold a bond to maturity your return is guaranteed (assuming no default) that is completely different from trading in and out of bond positions as Claymore does. The timing of the bond holdings to simulate a ladder is true, but the failure to hold to maturity makes this no better than any other bond fund. 

Close to maturity of course means close to maturity. That really is the only place they seem to say how it works. Sneaky.


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## ssimps (Dec 8, 2009)

mogul777 said:


> Ssimps, if you hold a bond to maturity your return is guaranteed (assuming no default) that is completely different from trading in and out of bond positions as Claymore does. The timing of the bond holdings to simulate a ladder is true, but the failure to hold to maturity makes this no better than any other bond fund.
> 
> Close to maturity of course means close to maturity. That really is the only place they seem to say how it works. Sneaky.


But the fund is still rolling / laddering / keeping close to maturity, bonds of 1,2,3,4 and 5 years. So this is different than many other bond funds that do not 'ladder'.

I agree that any bond ETF had share price volatility so you are not ever ensured your principle, but I think this is the case with any bond ETF is it not? It is an ETF in the end.

Thanks again.


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## mogul777 (Jun 2, 2009)

Exactly, it is just another ETF in the end, or as I said like any other (bond) fund. A fund will follow (to varying degrees) its mandate, in this case it is to "ladder" bonds in others it may be to invest in short or long bonds. To say other funds don't "ladder" because it's not in the fund's title is erroneous. As a matter of fact most generic bond funds will invest in bonds across the time spectrum, leaning toward either the manager's preference and/or the mandated timeframe (short, long). In simple terms bond funds add risk, with no real reward, and normally extra fees as well. Not to say the fund won't be decent but it is a far cry from an actual "proper" bond ladder.


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## ssimps (Dec 8, 2009)

mogul777 said:


> Exactly, it is just another ETF in the end, or as I said like any other (bond) fund. A fund will follow (to varying degrees) its mandate, in this case it is to "ladder" bonds in others it may be to invest in short or long bonds. To say other funds don't "ladder" because it's not in the fund's title is erroneous. As a matter of fact most generic bond funds will invest in bonds across the time spectrum, leaning toward either the manager's preference and/or the mandated timeframe (short, long). In simple terms bond funds add risk, with no real reward, and normally extra fees as well. Not to say the fund won't be decent but it is a far cry from an actual "proper" bond ladder.


It is just an ETF in the end, true, but it is not just like all other bond ETFs. You seem to agree with this. There are all kinds of different bond ETFs; ones that buy long term bonds, one that buys real-return bonds, some only gov., some only corp., etc, so all bond ETFs are not the same when it comes to what types of bonds they buy.

I thought that it was generally agreed that for the average person buying real bonds (especially commercial ones that don't even make it to the average consumer level most of the time) was not so easy and also had a lot of cost associated with it. I think I have seen a thread here about how bond brokers make big margins that cost the buyer. Is this correct?

Yes I totally agree bond ETFs add some risk (not as much as other types of ETFs or stocks though if you stick with gov. bond ETFs, I have seen at most +/-1% change in ETF price vs. my average cost for the ones I own since the spring), but they also add liquidity relative to true bonds do they not?

Please let me know your input, and other members if they have knowledge of buying true bonds. I have a good part of my portfolio in bond ETFs right now and what I am buying right now is more of these vs stocks or stock ETFs.

My understanding was that the bond ETF route (with really low MERs) was easier and maybe just as cost effective to get access to a wide range of bonds this way. If I am wrong, please let me know how and I'll start looking into selling at least some of the bond ETFs and buying true bonds.

BTW, tip for buying bond ETFs (based on my limited experience): most of the rapid volitility in bond ETF price seems to occur the few days after the ETF payout, and then the ETF price drops. So if you plan to hold them for a bit, buy then and not just before the div date. This way I have found that even when the ETF price changes, it is going up relative to your cost, not down. CLF is a good example of this.

Thank you again.


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