April 21, 2008
Sunny Days for New Solar Index and ETF
by Anne Moore Odell
Claymore Securities launches new ETF based on Melvin & Company's Global Solar Energy Index.
April showers bring May flowers, but this April, Melvin & Company and Claymore Securities are counting on the sun and solar energy to
bring investors. On April 1st, Melvin & Company launched the MAC Global Solar Energy Index (Index
Ticker: SUNIDX ), developed and
maintained by MAC Indexing. Then, on April 15th Claymore Securities launched the first solely
solar exchange-traded fund (ETF) on the NYSE (ticker: TAN) tracking the new index.
Following 25 companies from around the world, the
MAC Global Solar Energy Index has a combined market cap of almost $100 billion. The solar sector is
growing rapidly, with Melvin & Company reporting a recent annual growth rate for the sector of 47%
with a projected growth rate of 40% for the next several years.
"Many accept that
alternative energy is the way of the future," said Christopher C. Melvin, Jr., Melvin chairman and
CEO. "Solar power offers one of the few current mass-scale solutions to meet the world's enormous
demand for clean and renewable power without pollution or greenhouse gas emissions. Today's leading
companies are developing more affordable and efficient technologies that will continue to fuel
growth in the area for years to come," continued Melvin.
Companies in the MAC Global Solar
Energy Index include solar power equipment producers and their suppliers. The Index also tracks
companies that install, finance, and sell solar power. All companies in the Index must have minimum
market capitalization greater than or equal to $250 million and derive at least one-third of their
revenues from solar.
The new Claymore Solar ETF (ticker: TAN) will attempt to replicate
the MAC Global Solar Energy Index.
"TAN offers investors a pure investment in solar
stocks," said Christian W. Magoon, president of Claymore. "Currently, there are about four ETFs
that invest in clean energy and clean tech. But these also include fuel cells, biofuels, wind, and
some traditional power generation companies that might also have an alternative element. What is
different about this EFT is that it invests purely in solar companies."
distribution of the companies in the Index and the ETF are reflective of the overall domination of
Asian and European companies in the solar sector. Seventy-four percent of the companies in TAN are
from outside of the US. China and Germany are each headquarters for 29% of the companies in the
Index while the US is the home country for 26.3% of the companies.
All market caps are
represented in the Index with the average market cap being $3.8 billion. Small caps weigh in at
42.65%, large caps at 27.68% and mid-caps at 29.67%.
The top fund holdings include First
Solar Inc., Renewable Energy Corp, Q-Cells, Suntech Power Holdings, JA Solar Holdings, and
"One of the questions investors have about alternative energy/clean energy is,
are these companies profitable?" said Magoon. "In 2007, 20 of the 25 companies in the Index were
It is important to note, however, that solar stocks can be volatile. Magoon
told SocialFunds.com, "Because solar power is an emerging industry, because of shortages, because
of factors in government subsidies--in the short term, these stocks can be volatile. These
companies don't behave like traditional fossil fuel companies."
When the TAN was launched
last week shares started at $25. At the close of the market on April 21, the TAN's market price was
listed at $26.98 with 1,120,000 shares outstanding and total managed assets of $29,870,186.
TAN is only available to broker-dealers and institutional investors through the NYSE and the
American Stock Exchange in blocks of 80,000 shares (a "Creation Unit").
incur an expense ratio of 65 basis points. Other Claymore ETFs have individual investors making up
more than 50% of the ETFs' owners. At the end of December 2007, Claymore Securities had $18.5
billion in assets under management, supervision, distribution and servicing.
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