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Claymore launches first socially responsible ETF based on Sudan divestment

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Claymore Securities has launched the Claymore/KLD Sudan Free Large-Cap Core ETF, which is the first socially responsible exchange-traded fund tied to the issue of Sudan divestment and trac

Claymore Securities has launched the Claymore/KLD Sudan Free Large-Cap Core ETF, which is the first socially responsible exchange-traded fund tied to the issue of Sudan divestment and tracks the KLD Large Cap Sudan Free Social Index, on the American Stock Exchange.

‘Claymore Securities is dedicated to providing financial advisors and their clients with the investment choices they want,’ says senior managing director Christian Magoon. ‘By partnering with KLD, the recognised index provider for socially responsible investing, Claymore is offering investors the first ETF based on an index with a Sudan-free mandate in the index methodology.’

Thomas Kuh, managing director of KLD Research & Analytics, says: ‘The new KLD Sudan Free Large Cap Social Index is the result of institutional and retail investors’ desire for Sudan-free investment products. The grassroots efforts of citizens who care deeply about the crisis in Darfur have helped bring about new legislative mandates and socially responsible investing strategies to eliminate corporate support of Sudan’s current regime.’

The Large Cap Sudan Free Social Index comprises stocks in the Russell 1000 Index with market capitalisation generally greater than USD1bn and that meet KLD’s screens for environmental, social, and governance factors as well as involvement in Sudan.

The screen aims to identify business involvement in Sudan including ownership or control of property or assets, having employees or facilities, providing goods or services to companies in Sudan or obtaining goods or services from there, having distribution agreements with companies domiciled in Sudan, issuing credits or loans to Sudanese companies, or purchasing goods or securities issued by the government.

The ETF will normally invest at least 90 per cent of its total assets in common stock and ADRs that comprise the index. The index is rebalanced annually in June in conjunction with the reconstitution schedule of the Russell 1000 Index.

Founded in 1988, KLD Research and Analytics is a leading authority on social research and indexes for institutional investors, with 33 of the top 50 institutional money managers worldwide using its research to integrate environmental, social and governance factors into their investment decisions. More than USD10bn is invested in funds based on KLD indexes. The Large Cap Sudan Free Social Index is the second KLD product to addresses Sudan divestment.

Claymore has also launched the Claymore/BBD High Income Index ETF, which tracks a Benchmarks By Design Index that uses multi-factor proprietary selection rules to identify securities in a range of different asset classes offering the greatest potential from an income and risk/return perspective.

‘With the launch of the Claymore/BBD High Income Index ETF, we feel Claymore is offering financial advisors and their clients a highly-liquid and income-oriented investment product with unique investment opportunities,’ says Magoon. ‘As a large group of investors move from the accumulation phase to the distribution phase of their investment lives, Claymore ETFs seek to fill the distribution-oriented ETF void by offering investors attractive new choices when creating portfolios designed to distribute income.’

The BBD High Income Index is comprised of between 110 and 150 securities selected by a methodology designed to identify US listed common stocks and ADRs paying dividends, real estate investment trusts, master limited partnerships, closed-ended funds and traditional preferred stocks with potentially high income and superior risk/return profile.

The index approach is specifically designed to enhance investment applications and investibility and is rebalanced quarterly to assure timely security selections. The fund will normally invest at least 90 per cent of its total assets in securities that comprise the index.

Benchmarks By Design develops proprietary indices of equities, bonds, exchange-traded funds, unit investment trusts and other specialised asset classes and derivative products. Its design criteria target superior performance relative to established indices of conventional design. BBD’s proprietary indexes are responsive to direct investment and derivative product strategies that range from passive to semi-active.

Based in Lisle, Illinois, Claymore Securities is a privately-held financial services company that as of the end of May provided supervision, management, servicing or distribution on approximately USD17bn in assets through closed-end funds, unit investment trusts, mutual funds, separately managed accounts and exchanged-traded funds.

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