Claymore Investments, Inc. Launches New Canadian Bond ETF

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Claymore Investments, Inc., on Nov. 19, 2009 announced the launching of the Claymore Advantaged Canadian Bond ETF (TSX: CAB.TO).

The fund is a fixed income exchange traded fund (ETF) which is designed to provide investors with a low cost, tax-efficient exposure to a diversified Canadian bond portfolio. The plan is for the fund to track the DLUX Capped Bond Index, a high-quality subset of the DEX Universe Bond Index.

In other words, the price and performance of the DEX DLUX Capped Bond Index ("the Index") will determine the return of the fund, net of fees and expenses.

To qualify for the DLUX indexes, securities must have a minimum issue size or amount outstanding of $300 million, credit ratings of A or higher, and annual trade-volume turnover of 25% or higher. The Index tracks Canadian investment grade Government and corporate bonds, with target exposure allocations of 60% and 40%, respectively. The fund will receive exposure to the bond securities underlying the Index through the use of a forward agreement with TD Global Finance.

"Bonds are a very important part of an investment portfolio for income and diversification purposes and CAB is a simple, low cost way to get exposure to bonds on a tax-efficient basis. The fund is structured to provide tax-efficient income, making it an optimal investment for non-registered or taxable accounts and we are excited to be partnering with DEX, the leader in Canadian fixed income indexes, to bring this product to the market" said Som Seif, President and CEO of Claymore.

Stay on Track,

Money Magazine Hoss

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Does Balancing Your Portfolio Work?

From the Hoss's Mouth

For years now many money magazines and finance gurus have recommended portfolio diversification as a means to hedge against investment losses. For the most part this has been a successful strategy. However, last year's financial meltdown included nearly everything financial. Stocks, bonds, commodities and real estate all declined in value. Nearly everyone suffered big losses including those investors who diversified their financial holdings.

Does this mean that we should deep six the idea of portfolio diversification?

Hoss Cents Free Financial Money Magazine does not think so, and still prefers a balanced portfolio versus a portfolio that puts all your eggs in one or two baskets.

Hoss Cents Free Financial Money Magazine groups investors into several categories:

• Very Conservative: 82% fixed income, 18% equities.

• Moderately conservative: 78% fixed income, 22% equities.

• Middle of the road: 60% fixed income, 40% equities.

• Moderate growth: 43% fixed income, 57% equities.

• High growth: 76% fixed income, 24% equities.

• Aggressive: 0% fixed income, 100% equities.

What type of investor are you? Hoss Cents Free Financial Money Magazine's post asset allocation provided you with a simple calculation for determining the right mix between the two major asset categories of equities and fixed income.

You can use that method to determine how conservative (or not) of an investor you are, or you can use the services of a professional financial adviser who, if they are any good, will provide you with a client profile questionnaire.

Your work is not finished yet.

Now that you have determined what asset allocation is right for you, you must also decide what percentage of your fixed income will be cash, and what percentage will be bonds.

In addition, you should diversify your equities amongst several asset categories. You should not put 100% of your equity investment in one asset type (i.e. financials).

An easy way to diversify your equities is to purchase index or exchange traded mutual funds. If you prefer to build your own equities portfolio, be sure to include the major asset categories. A word of advice: Don't buy two things that are in the same asset category, otherwise you lose the diversity.

Once you have set up your portfolio with an asset allocation that suits your investor profile it will be necessary to rebalance it from time to time.

History has shown that a balanced portfolio will provide the best returns over the long haul. Hoss Cents Free Financial Money Magazine reminds you that there is no guarantee that your portfolio will grow, even if you have a perfectly balanced portfolio.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: May 31, 2009
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