Claymore Securities, Inc., an innovator of investment product solutions and wholly-owned subsidiary of Guggenheim Partners, LLC, and BNY Mellon, the global leader in asset management and securities servicing, today announced that the Claymore/BNY Mellon Frontier Markets ETF (the “Fund”) has surpassed $130 million in total assets. The Fund launched in June 2008 and trades on the NYSE Arca under the symbol “(NYSE:FRN).”
“It wasn’t so long ago that people considered Brazil, Russia, India and China as ‘frontier markets’. Over the past 10 years, we’ve seen those countries become major drivers of global economic growth.”
The Fund seeks investment results that correspond generally to the performance, before the Fund’s fees and expenses, of an equity index called the BNY Mellon New Frontier DR Index (the “Index”). Currently, the Index contains 47 constituents from 15 countries, including Argentina, Chile, Colombia, Czech Republic, Egypt, Georgia, Kazakhstan, Lebanon, Nigeria, Oman, Pakistan, Peru, Poland, Qatar and Ukraine. Sectors currently represented in the Index include financials, utilities, energy, telecom, materials, industrials, consumer staples and consumer discretionary. As such, the Fund provides investors access to a broad range of countries in the very early stages of development—a market segment that may offer an attractive risk/return profile and a lower correlation to the developed and emerging markets. The expense cap for the Fund is 0.65%.1
“Unlike more developed or emerging economies, frontier markets offer risk-tolerant investors a source of untapped economic potential,” said Steven A. Baffico, senior managing director and head of U.S. Retail for Claymore Securities, Inc. “Investors are recognizing the potential growth opportunities many of these markets currently offer, such as the early development of effective harvest and management of natural resources, advancing their sovereign balance sheets, trade surpluses, infrastructure expansion, rising per capita GDP and the corresponding growth of the consumer. FRN offers investors the benefit of accessing these investment themes.”
“Investors and managers continue to seek new ways to diversify their portfolios during these times of market uncertainty,” said Michael Cole-Fontayn, chief executive officer of BNY Mellon’s Depositary Receipts group. “It wasn’t so long ago that people considered Brazil, Russia, India and China as ‘frontier markets’. Over the past 10 years, we’ve seen those countries become major drivers of global economic growth.”
BNY Mellon offers more than 140 depositary receipts (DR) indices, of which 18 are used as the primary index for ETFs that trade in the U.S., Canada and Korea.
“This is an important milestone for the Claymore/BNY Mellon Frontier Markets ETF,” said Julio Lugo, director of Depositary Receipts Structured Products at BNY Mellon. “From Africa to Eastern Europe and Latin America, the companies in this fund represent the next wave of newly developing markets. DR index-based funds give investors access to these areas in a convenient, cost efficient manner.”
The BNY Mellon New Frontier DR Index tracks all American and global depositary receipts traded on the London Stock Exchange, the New York Stock Exchange and the NASDAQ. The index is calculated on a continuous basis throughout the trading day, starting with the open of the U.K. markets and ending at the close of the U.S. markets. The BNY Mellon New Frontier DR Index is capitalization-weighted and adjusted for the free-float using Dow Jones’ methodology.
For more information on the Claymore/BNY Mellon Frontier Markets ETF (NYSE Arca: FRN) please visit www.claymore.com/FRN.
About Claymore Securities
Claymore Securities, Inc. offers strategic investment solutions for financial advisors and their valued clients. As an innovator in exchange-traded funds (ETFs), unit investment trusts (UITs) and closed-end funds (CEFs), Claymore often leads its peers with creative investment strategy solutions. In total, Claymore entities provide supervision, management, or servicing on approximately $15.3 billion in assets as of June 30, 2010. Claymore Securities, Inc. is a wholly-owned subsidiary of Guggenheim Partners, LLC, a global, diversified financial services firm with more than $100 billion in assets under supervision. Guggenheim, through its affiliates, provides investment management, investment advisory, insurance, investment banking, and capital markets services. The firm is headquartered in Chicago and New York with a global network of offices throughout the United States, Europe, and Asia. Claymore Advisors, LLC, an affiliate of Claymore Securities, Inc., serves as the Funds’ investment adviser.
About The Bank of New York Mellon
The Bank of New York Mellon (“BNY”) is the leading depositary bank, managing more sponsored/depositary receipt programs than all other depositary banks combined. BNY currently issues depositary receipts for more than 2,250 programs representing 70 countries, and acts as depositary for 65% of all public sponsored depositary receipt programs. Additional information can be found at adrbny.com.
1There is a contractual fee waiver in place for this Fund, through December 31, 2013 to the extent necessary in keeping the Fund’s operating expense ratio from exceeding 0.65% of average net assets per year. Some expenses fall outside of this expense cap and actual expenses may be higher than 0.65%. Without this expense cap, actual returns would be lower.
RISK CONSIDERATIONS Investors should consider the following risk factors and special considerations associated with investing in the Fund, which may cause you to lose money, including the entire principal amount that you invest. Equity Risk: The value of the securities held by the Fund will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities held by the Fund participate, or factors relating to specific companies in which the Fund invests. Foreign Investment Risk: Investing in non-U.S. issuers may involve unique risks such as currency, political, and economic risk, as well as less market liquidity, generally greater market volatility and less complete financial information than for U.S. issuers. Risks of Investing In Frontier Securities: Investment in securities in emerging market countries involves risks not associated with investments in securities in developed countries, including risks associated with expropriation and/or nationalization, political or social instability, armed conflict, the impact on the economy as a result of civil war, religious or ethnic unrest and the withdrawal or non-renewal of any license enabling the Fund to trade in securities of a particular country, confiscatory taxation, restrictions on transfers of assets, lack of uniform accounting, auditing and financial reporting standards, less publicly available financial and other information, diplomatic development which could affect U.S. investments in those countries and potential difficulties in enforcing contractual obligations. Frontier countries generally have smaller economies or less developed capital markets than traditional emerging markets, and, as a result, the risks of investing in emerging market countries are magnified in frontier countries. These securities are less correlated to global economic cycles of more developed counterparts and therefore have low trading volumes and the potential for extreme price volatility and illiquidity. To the extent that the Index is focused on securities of any one country, including Poland, Chile or Egypt, the value of the Index and thus the Fund will be especially affected by adverse developments in such country, including the risks described above. Financial Services Sector Risk: This industry is subject to extensive government regulation, can be subject to relatively rapid change due to increasingly blurred distinctions between service segments, and can be significantly affected by availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. In particular, events in the financial sector since late 2008 have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign. Micro-, Small- and Medium-Sized Company Risk: Investing in securities of these companies involves greater risk as their securities may be more volatile and less liquid than investing in more established companies. These securities may have returns that vary, sometimes significantly, from the overall stock market. Micro-cap companies may be newly formed, less developed and there may be less available information about the company. In addition the Fund is subject to Non-Correlation Risk, Replication Management Risk, Issuer-Specific Changes, and Non-Diversified Fund Risk. As with any investment, you should consider how your investment will be taxed. The tax information contained in the prospectus is provided as general information. Investors should consult their own tax professional about the tax consequences of an investment as Claymore Securities, Inc. does not offer tax advice. Please read the Fund’s prospectus for more detailed information on these risks and considerations. Please note: the above risks are a broad overview of the potential risks associated with investing in the Frontier markets. Investing in securities of Frontier countries involves significant risk. The prospectus contains a more detailed discussion of these individual risks and should be evaluated when determining an investor’s risk tolerance.
“BNY Mellon”, and “The BNY Mellon New Frontier DR Index” are service marks of The Bank of New York Mellon Corporation (the “Bank”) and have been licensed for use for certain purposes by the Investment Adviser. The Fund is not sponsored, endorsed, sold or promoted by The Bank of New York Mellon (BNY Mellon) (“Licensor”). Licensor makes no representation or warranty, express or implied, regarding the advisability of investing in securities generally or in the Fund particularly or the ability of The BNY Mellon New Frontier DR Index (“Index”) to track general market performance. Licensor’s only relationship to the Licensee is the licensing of the Index which is determined, composed and calculated by Licensor without regard to the Licensee or the Fund. Licensor has no obligation to take the needs of the Licensee or the owners of the Fund into consideration in determining, composing or calculating the Index. Licensor shall not be liable to any person for any error in the Index nor shall it be under any obligation to advise any person of any error therein. Please refer to the prospectus for a full disclaimer.
Consider the investment objectives, risks, charges and ongoing expenses of any ETF carefully before investing. The prospectus or summary prospectus, if available, contains this and other relevant information. Please read the prospectus carefully before investing. To obtain a prospectus, visit www.claymore.com or contact a securities representative or Claymore Securities, Inc. 2455 Corporate West Drive, Lisle, IL 60532, 800-345-7999.