Guggenheim ETFs - dummies

By Russell Wild

With its takeover of Rydex SGI in 2011, Guggenheim became eighth among U.S.-based ETF providers, with about $11 billion in assets. It is an interesting company with an unusual mix of products.

Many of its ETFs are largely designed for people who are unhappy buying the usual indexes and want to take something of a gamble on a particular equity style, such as large growth stocks. For such an investor, Guggenheim offers its customized S&P 500/Citigroup Pure Growth ETF.

Using a proprietary seven factors to determine which stocks among the S&P 500 are the most “growthy,” the firm bundles them into a package that promises purity for the gung-ho growth investor. The company does the same for you on the other side if you are a gung-ho value investor. Yeeeehaaaaa!

If you want to gamble that the Euro is about to go on a tear, you can buy the firm’s Euro Currency Trust exchange-traded product — not quite an ETF, but almost.

And perhaps most intriguing of all of Guggenheim’s investment products, the firm offers an innovative S&P Equal Weight ETF (RSP), which, just like it sounds, offers you an opportunity to invest in the S&P 500 with all company stocks represented in equal allocations (as opposed to the more traditional market capitalization–weighted method of allocation).

With an average annual management fee of about 0.50 percent, Guggenheim funds are a bit pricey. As for the currency funds, the danger is that there is simply no way to know which way the Euro is going vis-à-vis the dollar.

The “pure” funds are intriguing, but in their first few years of existence, they haven’t exactly lit the world on fire. The S&P 500 Pure Value ETF (RPV), for example, has a one-star rating from Morningstar . . . and can you blame Morningstar for the trash review? The fund lost nearly 48 percent of its value in 2008 — that’s 11 percentage points worse than the Russell 1000 Value Index.

The S&P Equal Weight ETF (RSP) is worth some consideration, especially for smaller investors.

For more information, call 800-345-7999 or visit the Guggenheim website.