Claymore, the Chicagoland issuer known for its line of themed ETFs and targeted sector funds, has launched three new ETFs based on broad market indexes maintained by Wilshire. The new funds include the Wilshire 5000 Total Market ETF (WFVK), Wilshire 45oo Completion Index ETF (WXSP), and Wilshire U.S. REIT ETF (WREI).
Many investors are familiar with the Wilshire 5000 Total Market Index, a benchmark used to measure the performance of domestic equity markets. Originally named after the 5,000 stocks included when it was created in 1974, the index currently includes approximately 4,000 U.S. stocks. While many well-known market barometers, such as the Dow Jones Industrial Average, S&P 500, and Russell 1000, consist entirely of large cap stocks, the Wilshire 5000 gives significant weight to smaller firms. Mid cap and small cap stocks make up about 20% and 9%, respectively, of the Wilshire 5000, making it more representative of the broad U.S. stock market.
While the correlation between the Wilshire 5000 and the S&P 500 has historically been very strong, the relative risk and return profiles of these benchmarks are certainly not identical. Over the last year, the Wilshire 5000 has gained about 73%, while the S&P 500 is up about 68% over the same period.
|Total Stock Market ETFs|
|ETF||Index||Stocks In Index||Expenses|
|Vanguard Total Stock Market ETF (VTI)||MSCI U.S. Broad Market Index||3,550||0.09%|
|iShares Russell 3000 Index Fund (IWV)||Russell 3000 Index||2,972||0.21%|
|Schwab U.S. Broad Market ETF (SCHB)||Dow Jones U.S. Broad Stock Market Index||~2,500||0.08%|
|Claymore Wilshire 5000 Total Market ETF (WFVK)||Wilshire 5000 Total Market Index||4,018||0.12%|
The Wilshire 4500 Completion Index ETF is based on a related benchmark that is constructed by removing the 500 stocks in the S&P 500 from the Wilshire 5000 Index. As such, WXSP will maintain minimal exposure to large cap equities (they make up about 4% of the underlying index) while offering significant exposure to both mid caps and small caps (each makes up about 48% of the Completion Index).
The U.S. Real Estate Investment Trust Index ETF is based on another well-known Wilshire index that consists of publicly-traded real estate investment trusts. The Wilshire U.S. Real Estate Investment Trust Index currently consists of about 82 REITs, with about 75% of the benchmark allocated to mid cap and small cap companies.
The launch of these three funds clearly represents a movement by Claymore to round out its ETF product line by expanding into broad-based domestic funds. Historically, Claymore’s product line has centered around targeted sector and international funds–such as the NYSE Arca Airline ETF (FAA) and Delta Global Shipping Index ETF (SEA)–as well as more funds that rely on proprietary screening methodologies to deliver themed investment plays or identify component companies poised for outperformance (e.g., RYJ and STH).
Over the last year, Claymore has expanded its suite of China ETFs to include the first all cap ETF focusing exclusively on Chinese stocks (YAO) and a fund targeting China’s technology sector (CQQQ). Now the firm, which was acquired last year by Guggenheim, is venturing into the “pure beta” ETF arena that has traditionally been dominated by iShares, Vanguard, and State Street.
“This is an exciting addition to our growing portfolio of ETF products, extending our line-up into broad-based domestic equities.” said William Belden, Managing Director at Claymore. “Leveraging the expertise of Wilshire and their widely followed indexes, investors now have an opportunity to access the U.S. equity and REIT markets with the inherent benefits of ETF investing—efficiency, transparency and flexibility.”
Disclosure: No positions at time of writing.