An ETF Gets An Extreme Makeover (XGC, IWF)

change“Last Friday (7/24/09), one ETF died and a new ETF was born.  However, you won’t see these events in most ETF statistics because it was the same fund.  The Claymore/Great Companies Large-Cap Growth Index ETF was launched on 4/3/07 under the ticker symbol XGC.  The ETF did not perform very well.  From inception through 11/24/08, its -58.5% return trailed far behind the -37.6% return of iShares Russell 1000 Growth Index Fund (IWF), a widely followed large cap growth benchmark,”  Ron Rowland Reports From Invest With An Edge.

“In the subsequent eight months (11/24/08 – 7/24/09) its fortune changed as XGC gained +56.8% to the +27.5% advance of IWF, but its lifetime performance still lagged by more than 15%.  Having failed to attract assets, XGC shows up often in  zero volume reports, and has been a monthly regular in ETF Deathwatch.  After the close on July 24, the Claymore/Great Companies Large-Cap Growth Index ETF ceased to exist.  Yet the ticker symbol lives on and continues to trade.  In fact, it had more volume this week than in the previous three weeks combined and the most trading activity in more than two months,”  Rowland Reports.

“Why?  As of Monday (7/27/09), the fund sports a new name and a new objective.  XGC is now Claymore/BNY Mellon International Small Cap LDRs ETF.  It is not unusual for ETFs and mutual funds to tweak their objectives.  For example, some funds might change “small cap” to “small and mid cap” in order to expand their investment universe.  The change to XGC was not a tweak and was not intended to enlarge its universe – it was an Extreme Makeover.  On Friday (7/24/09), XGC was 100% US large cap growth.  On Monday (7/27/09), XGC was 100% non-US small cap.  There is zero overlap between the portfolio before and after.  This is not a change.  This is a new fund,”  Rowland Reports.

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