Sustainable Wealth Management Announces the Rebalance of the SWM Canadian Energy Income Index
Posted on: Monday, 29 September 2008, 09:00 CDT
Sustainable Wealth Management, an independent provider of industry specific fundamental indexes, today announced the rebalancing of the SWM Canadian Energy Income Index(TM) (SWMEIT - Bloomberg) according to the index tactical asset allocation methodology. The index is rebalanced according to the swings in the quarterly price of WTI crude oil versus its 4 quarter moving average. This is the third asset allocation switch since inception of the index on June 30, 2004. The table below highlights the prior transitions.
Time Period Tactical Asset Allocation ---------------------------------------------------------------------- June 2004 to Sept 2006 Bull Mode ---------------------------------------------------------------------- Sept 2006 to Mar 2007 Bear Mode ---------------------------------------------------------------------- Mar 2007 to Sept 2008 Bull Mode ---------------------------------------------------------------------- Current Bear Mode ----------------------------------------------------------------------
When crude oil experiences a precipitous drop like what occurred in the current quarter, the methodology of the index is to revert to a conservative, income-focused energy stock mix. The information below outlines the asset allocation switch from bull mode to bear mode that will occur at the beginning of trading on Monday, September 29, 2008.
Current Asset Allocation (Q3, 2008): Bull Mode Oil Sands 70% Canadian Royalty Trusts 30% New Asset Allocation (Q4, 2008): Bear Mode Oil Sands 30% Canadian Royalty Trusts 70%
The index has seen the income distributions increase significantly over the last four years as the record energy prices have boosted the earnings of the constituents in the index. The recent drop in company share prices at a time of rapidly rising income distributions is creating a unique situation where the distribution yield of the index is at a record level and will increase substantially with the upcoming new asset allocation switch. Historically the index has yielded an average of 4.74% trailing 12 month distribution with a range of 7.88% to 2.30%. The current 12 month trailing yield is 5.83%. The projected forward yield of the index will be 11.50% after today's quarterly rebalance.
Performance statistics and index methodology and constituents are available on the index website, http://www.swmindex.com/canadianenergy. An exchange-traded fund based on the SWM Canadian Energy Income Index(TM) has been launched by Claymore Securities, Inc. and trading began on July 3, 2007. For more details, visit the following link: http://www.claymore.com/etf.
Source: Business Wire
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