I watched all of the Clemens hearing that CNBC showed and it was brutal. Perhaps naively, I hope Clemens did not use HGH or steroids.Now I know why congress says they hold hearings about baseball but as I watched I still found myself wondering what the point of their involvement is. It makes no sense to me. Others may feel they are right to be involved, which is ok, but it seems like a colossal misuse of resources.
I am not talking about the issue just who is apparently presiding over it. And the one guy from Indiana who tore McNamee a new one, tell me that guy didn't remind you of Senator Geary from Nevada (this is a pop culture reference that hopefully everyone knows).
By now you know that Claymore just listed three ETFs that have the (kind of) brand name of Capital Markets. The broadest fund is the Capital Markets Index Fund (UEM) which takes in equities, fixed income and money market instruments. There are 9903 holdings in all (according to the Claymore website).
Slightly narrower are the Capital Markets Bond Index Fund (UBD) and the Capital Markets Micro Term Fixed Income Fund (ULQ).
I first heard about these ages ago and I have to say I was confused about what has ultimately become UEM when I first heard about it and I am still confused about it now. I asked one person from Claymore what the point was and he said that you can own the entire capital market in one fund. It might be me (seriously) but I don't know why that is useful.
As of year end 2007 UEM was 51.24% in equities, 35.55% in long term fixed income and 13.21% in cash and equivalents.
What I do know from having talked to Claymore is that there is a ton of science and research behind the concept, the people who have created (Dorchester is the name of the company) are very smart and I do not doubt it will do what it is intended to do.
But I still do not know what the point is. You can read the literature and perhaps you can glean a better understanding than me.
Part of my lack of understanding is that I think even the laziest and most passive of investors make the stocks/bonds/cash decision but buying UEM takes even that away.
You don't have to have read this site very long to know I prefer blending together narrower things to allow for management of things like sector, style, asset class (think commodities, currencies, REITs and infrastructure), different countries, volatilities, yield, cap size and so on.
Even investors who would never pick an individual stock can make use of narrow products, in proper moderation, to add a lot of value versus a broad equity benchmark (as a note, adding value doesn't have to mean outperforming it can also mean smoothing out the ride).
After all that maybe UEM will turn out to be the most useful fund ever but I still probably won't get it.
27 comments:
I think you nailed it, Roger. It's the ultimate one decision, buy and hold, lazy portfolio. It won't appeal to folks who take a passionate interest in markets, but that's a pretty small slice of investors. If you're a newbie or just have a small nest egg to invest, it sounds like a good way to wade in.
My bet though is that it won't gain a lot of traction because it won't get noticed in the cascade of new etfs. It's not sexy enough to break through the clutter. If it were marketed by someone with more muscle like Barclay's, it might be a different story.
The only place I personally see where this could be useful is for the super young folks who put only say $500 into an account somewhere. Buying a one size fits all capital markets ETF might be better for a few years from a transaction cost perspective. Buying 5 ETFs at $10 each would cost them 10% of their money. Buying one would only be 2%.
Roger:
As long as the exemption from anti-trust laws, granted by Congress, remains in place, Congress retains the right (in their view) to hold hearings on/about professional sports when they feel there is something to investigate.
My wish is that Congress have as many Clemens-like sessions as possible. Thus, Congress will not have time during their three day work week to pass legislation picking our pockets creating new schemes to please their narrow lunatic fringes on the left (and right).
Regarding the new Claymore Funds, I agree with Roger. 100%.
T
I don't get it (UEM)? Transaction costs are very low these days. My kids have ~$2k UTMA's with a dozen holdings in individual equities from around the world, MLP's, bonds, and some double-inverse protection. Even for someone who wants to keep it simple, Vanguard's VTI has a 0.07% expense ratio, and BND has expenses of 0.11% - much lower than UEM's 0.37%.
a further point to belie my not getting UEM et al; i can't even write a TSCM article on them, my not getting it so profound.
Larry, I did not forget the anti-trust but i just found the whole thing re-dickle.
Another new fund worth looking at. Would appreciate your insight. Accessor ASAFX Strategic Alternatives Fund.
http://www.accessor.com/pdfs/StrategicAlternativesProspectus.pdf
Mr. Clemens, when purchasing these steroids, did you use any buffers?
Yah, buffas. We had lottsa buffas.
Professional "sports"? re-dickle!
nice push a button reference
If you had the choice of dealing with very serious issues such as budgetary deficits, wars, a faltering economy, and crumbling capital markets on the one hand and on the other you could talk a little baseball, well....
I almost like the idea of UEM, except for the bond/cash part.
The benefit of something like UEM is that I can spend more time looking for much different asset classes, such as commodity, currency, hedge-like funds, infrastructure, and alternative investments. I think that would be more fruitful for me than trying to tweak all the stock categories, which are often referred to as different asset classes, but which are, to me, just too similar.
I would love to see an ETF that holds all the market caps in growth and value, in developed and emerging markets. Readers, what do you think is the smallest amount of ETFS that could accomplish that?
Roger, I agree that the baseball hearings are a gigantic waste of tax payer money.
re bear mkt characteristics
hussman:
http://www.hussmanfunds.com
/html/7374.htm
http://www.sharechat.co.za
/index.php/m/18548/
re this month:
good chance of a rally to break out of 20dma, but the downtrend remains intact
re congress and clemens,
i had the same reaction,why not let a civil court deal with this? great tv either way,but pathetic govmnt
re sibling, well, best to just not comment..sorry to see that post last night.
Anon 10:58
I'm currently using 10 funds to cover equities in my lazy portfolio. You might be able to get away with only 8 if you use the large blend funds.
U.S. Micro Blend
U.S. Small Value
U.S. Small Growth
U.S. Large Value
U.S. Large Growth
Intl Small Value
Intl Small Growth (tough to find)
Intl Large Value
Intl Large Growth
Emerging Markets
Whose Senator Geary from Nevada?
I am personally quite excited about the UEM concept. Great way for people with small resources to buy a broad, indexed portfolio - right now, it would take at least three or four purchase, each with minimums of several thousand dollars, to get the same effect through Vanguard funds, for instance.
Also, a great way to cut down on transaction costs associated with buying the equivalent basket of ETFs.
I only wish someone offered an ETF that was say, 30% Wilshire 5000 index and 70% FTSE World ex-US index.
That would cut by half the transaction costs associated with buying and holding "the entire world". The lowest trading costs for ETFs I know are around $4 (via Sharebuilder) and even that is a significant percentage for someone who has a small amount to start with and can only contribute a couple hundred dollars at a time.
Roger:
This has nothing to do with Clemens or Claymore (at least directly): can you comment or give your views / understanding of the failures in the auction rate markets that apparently hitting several ETFs today (such as HPF)?
some great questions.
i will take a stab at answering for tomorrow's post, actually published late tonight.
however, Senator Geary was the corrupt senator from Godfather II.
Honest.....she was alive..she was laughing...I don't know what happened....
Don't worry Senator...we'll take care of it....
:)
And the next thing ya know...he's in Cuba with a redhead!
Great movie!!!
What exactly does Linda P win when she seems to regularly get all of your (quite humorous and entertaining) pop culture references?
Keep 'em coming - they lighten up what has been a series of dreary days.
Rick
Linda has amassed quite a collection of Lenny Dykstra coasters courtesy of Dunkin donughts via Adam Warner
The Senator you mention in the Clemons hearings is actually Congressman Dan Burton. This guy has admitted to fathering a child with one of his staffers, was the only (430-1) Congressman to vote against making free golfing trips illegal for Congress and publicly called Pres. Clinton a "scumbag". And he has the cajones to question those two? Little wonder Congress has a 16% approval rating.
what do you want to bet that the S&P at 1350 was very good ending to options expiration for market makers and bad for the little guy? What do you want to bet the rally comes on strong now that options expiration is behind us?
No I'm not cynical, I just have enough gray hairs to be realistic.
To Anon 4:17,
What makes you think 1350 was a good ending for market makers?
According to my calendar, there is still one more day for options trading.
anon 4:17 i have been trying to find the open interest at various strikes but struck out after a couple of diff sites
anon 4:26, SPX option settle based on the opening print of each of the components Friday morning. the settlement value prints (i think) an hour or two after the open.
I only saw the high (or low)lights from clemens's testimony; if I were a congressman on the panel, my questions would be along the lines of "Roger, do you remember all the major leaguers who appeared here a few months ago and swore they never used steroids, only to be found out as liars a few days later ?, then why on earth should we believe you ?". For the ultimate in lazy investing, check out www.scottburns.com for his "couch potato" portfolios, several flavors of index funds with returns listed.
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