ETF Tracking Spinoffs Routinely Beats S&P500

The Claymore/Beacon Spinoff ETF (CSD) seeks to replicate an index called the Beacon Spin-off Index, which is comprised of roughly 40 companies that have been spun-off within the past two years.  The ETF is rebalanced twice per year.

For varying reasons, spin-offs tend to outperform their former parent companies and the market as a whole.  To date, there was no way to replicate this phenomena without manually tracking and trading the various spin-offs as they occurred through the years.

Now, CSD is able to do that for you, with a modest 0.6% expense ratio which is less than most actively managed mutual funds.  Given the low turnover of the fund, lower tax implications should be anticipated as well.

Performance:

The ETF has turned in impressive performance vs. the S&P500 as a benchmark (consider that some of the holdings are from international ADRs, but S&P500 was utilized as a common benchmark for US investors):

—————- CSD——S&P500————————–

3 Month:         11% 6%
6 Month:         32% 20%
YTD:                 60% 22%
1 Year:            65% 28%

Top 10 Holdings:

DISCOVER FINANCIAL SERVICES 6.77 %
TELEMEX INTERNATIONAL-ADR 5.31 %
MSCI INC-A 5.16 %
LENDER PROCESSING SERVICE 5.13 %
SCRIPPS NETWORKS INTERACT 5.02 %
COVIDIEN PLC 4.74 %
TERADATA CORP 4.58 %
VMWARE INC-CLASS A 4.55 %
DR PEPPER SNAPPLE GROUP  4.43 %
TOTAL SYSTEM SERVICES INC 4.36 %

Be mindful that the ETF has low trading volume which can lead to wide bid/ask spreads, so watch your market vs. limit orders if considering entering into a position.

For more ETF ideas, check out this full ETF List 800+ strong or see which 18 ETFs are up over 100% so far this year.

Disclosure: No position at the time of publication.

Tagged as: Spinoff ETF