Stock Analyst ETFs

Wall Street employs thousands of securities analysts who attempt to select superior investments through fundamental and technical analysis. So, why shouldn't they have their own indexes and ETFs that track them? They do now.

Claymore has teamed up with Best Investors Research (BIR) to offer a series of ETFs based on Wall Street analyst research. BIR compiles data from five leading independent research firms and creates an overall master list. Each research company ranks its stocks on a 10-point scale on multiple fundamental factors including valuation, leverage, earnings growth, and price momentum.

The BIR research team produces the master list by blending the individual rankings of each independent research company to establish a composite score. Several ETFs are formed from the master list. The Claymore/BIR Leaders 50 (symbol: BST) follows the BIR Leaders 50 index, which represent the stocks with the highest rankings. The Claymore/BIR Leaders Mid Cap Value (symbol: BMV) and the Claymore/BIR Leaders Small Cap Core (symbol: BES) follow BIR subsectors that represent those areas on the master list.

The First Trust Value Line Equity Allocation ETF (symbol: FVI) seeks investment results that correspond generally to the price and yield the Value Line Equity Allocation Index. The index is designed to objectively identify and select those stocks that appear to have the greatest potential for capital appreciation from the universe of stocks. Value Line gives a ''Timeliness,'' ''Safety'' or ''Technical'' ranking of 1 or 2, using the Value Line ranking systems.

Stocks in the database are separated by size and style. The stocks in each style are ranked, using multiple factors including price-to-cash flow, price-to-book, return on assets, and price appreciation. The 25 highest ranked stocks in each of the six styles are selected and equally weighted within each classification. The Value Line Equity Allocation Index is rebalanced semiannually each February and August through the reapplication of the stock selection process.

The PowerShares DWA Technical Leaders Portfolio (symbol: PDP) is based on the Dorsey Wright Technical Leaders Index. The index includes approximately 100 U.S.-listed companies that have demonstrated above-average relative price strength. Dorsey Wright takes into account the performance of each of the 3,000 largest U.S.-listed companies as compared to a broad market index, as well as industry sectors and subsectors. The index is reconstituted and rebalanced quarterly, using the same methodology described earlier.

Undiscovered stocks have strong appeal with some very savvy investors, as my years in the brokerage business will attest. The fewer analysts following a company, the more reason to get excited about it.

The Claymore/Sabrient Stealth ETF (symbol: STH) follows the Sabrient Stealth Index. It is a different twist because the index provider is looking for companies that are not heavily followed by analysts. The objective of the index is to actively represent a group of stocks that are flying under the radar screen of Wall Street's analysts, yet have displayed robust growth characteristics that give them the potential to outperform the Russell 2000 index.

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