We were pleased (and a bit embarrassed) to recently discover the Guggenheim Spin-Off ETF(CSD). The index, which tracks the Beacon Spin-Off Index, owns 40 stocks, with more than half of its assets in 10 stocks. The index is rebalanced yearly, though rebalances may be postponed if there are insufficient assets. Companies eligible for inclusion are companies that were either spun off or carved out between 6 and 30 months prior to the rebalancing. We believe that this misses opportunities which often come at or soon after distribution. The fund’s performance has been nothing particularly impressive, with an average annual return of 0.05% since inception on 12/15/2006. We’ve always felt that the best approach to spin offs is to pick those that represent good value. We see nothing in the performance or makeup of this ETF to make us change our opinion.
Disclosure: The author hold no position in any security mentioned