ETF M&A Heating Up: Guggenheim To Buy Claymore

by on August 3, 2009 | ETFs Mentioned:

Guggenheim Partners, a global diversified financial services firm, has entered into an agreement to acquire Lisle, Illinois-based Claymore Group, including Claymore Securities, Claymore Advisors, and Claymore Investments in Canada. Claymore is a leading provider of unit investment trusts (UITs), closed-end funds (CEFs), and ETFs. According to June data from the National Stock Exchange, Claymore is the 13th largest ETF issuer, with about 35 funds and assets under management of $1.7 billion (that figure should be a lot higher once August figures are released given strong equity market performances over the last 30 days). Total Claymore assets under supervision total approximately $12.9 billion.

In Claymore, Guggenheim acquires one of the most innovative ETF issuers. Claymore’s list of firsts in the ETF industry is rather impressive, including:

Claymore is also home to many of the top-performing ETFs for 2009 to date. Its China Real Estate ETF (TAO) and China Small Cap Index ETF (HAO), both of which are based on indexes maintained by AlphaShares, are up 74% and 81% so far in 2009.

Claymore also has about $2 billion in ETF AUM in Canada.

The deal isn’t quite on the same scale as iShares / BlackRock, but it indicates that ETF issuers are hot commodities at the moment, and big players in the financial services arena who missed getting in on this trend from the beginning are anxious to catch up. According to Matt Hougan at Index Universe, the deal is a sign of an emerging trend of acquisitions in the ETF space.

For Claymore, the deal means that the firm’s ETF products will have significantly more powerful resources at their disposal. “This puts us on a new playing field in terms of having more resources and the power of a worldwide recognized brand,” said Christian Magoon, president of Claymore Securities, according to Index Universe. For Guggenheim, the acquisition will extend the company’s reach into the retail side of the investment community. Guggenheim’s operations at present are geared primarily towards institutional investors.

So the marriage seems like a very positive development for the ETF industry. Claymore’s ETF product line will get a lot of additional firepower behind it, potentially allowing for significant expansion of existing funds and accelerated launches of more innovative products. Guggenheim’s size and reach may also mean lower costs for investors down the road if the firm hopes to compete more with iShares and Vanguard for traditional “beta ETF” dollars.

Terms of the deal were not immediately disclosed.

Disclosure: No positions at time of writing.