Intellectual Property Makes ETF Look Smart

In late 2006, I wrote favorably about the then-new Claymore Ocean Tomo Patent ETF(OTP Quote).

The fund invests in 300 companies with the highest patent ratings, on the basis of a proprietary scoring model of the portfolios of the 1,000 largest U.S.-traded companies, including American depositary receipts. The big theme is that intellectual property is more valuable than hard assets such as plant and equipment.

On that basis, OTP is going to be a large-cap vehicle that will usually tilt toward growth. As you can see from the chart, OTP has blown away the S&P 500 since its inception and has also meaningfully outperformed since the October peak (OTP is down 13%, and the index is down 17%): ...