Blogs & Comment

An ETF competition (and winning it)

Claymore Investments of Toronto is holding an exchange-traded fund (ETF) competition from August 17 to September 18. Called the 2nd Annual Claymore Next Top Model Summer ETF Competition, participants compete for prizes by picking a minimum of three TSX-listed Claymore ETFs and allocating $100,000 in play money over them. More contest details are at the end of this post.
Sounds like fun! But bear in mind such competitions arent to be played the same wayone should invest an actual amount of money. For one thing, you shouldnt seek to own stocks for their short-run performance. Its the long run where returns are less exposed to random fluctuations and lucky outcomes.
Nevertheless, Professor Moshe Milevsky won a Globe and Mailstock picking contest three years in a row and wrote a paper on how to win contests like these. What youdo, he said, is pick from the most volatile investments.
This advice is somewhat qualified for those wanting to win the grand prize because it is based on risk-adjusted returns. But for the other prizes (see below), that is the way to go (and you still have a shot at the grand prize).
As well, the Prof would recommend, as I understand it, a contrary stance. Most participants will likely be assuming current trends continue, so it will be easier to differentiate your portfolio by going against the grain.
Diversification is also a handicap to winning contests like these: the more narrowly focused the portfolio, the greater the likelihood of an extreme performance reading (up or down).
Putting things together, could thewinning portfoliofeature a prominently weightedClaymore NGX Canadian Natural Gas Index ETF? It has the volatility and isfalling while everthing else is rising. But the oversupply problem in gas is quite severe and the timing could be off …
Contest details:
No purchase is required. Submissions have to be entered by Monday August 17th, 2009 at 9:30am ET. The prizes are:

  • a grand prize of $1,000 cash (or a $1,500 donation to a Canadian registered charity of the winners choice) will be awarded to the competitor with the best total risk adjusted performance
  • a Wii Fit Bundle (value of $453.99 Canadian) will be awarded to the competitor with the best total return performance
  • an iTunes gift certificate, Starbucks gift card, or Claymore promotional merchandise (approximate retail value of $20) for those with the best weekly return performance.

To help with ETF picks, participants can use Claymores Portfolio Index Allocator Tool.