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Rating:Guggenheim Consolidates, Yet the Rydex Name Lives On Not Rated 3.0 Email Routing List Email & Route  Print Print
Wednesday, September 21, 2011

Guggenheim Consolidates, Yet the Rydex Name Lives On

News summary by MFWire's editors

Guggenheim Partners [see profile] is combining its 11 asset management arms, including the exchange-traded fund businesses from Claymore and Rydex [see profile], into a new subsidiary called Guggenheim Investments, Reuters' Jessica Toonkel reports. The move creates a single asset manager with $24.1 billion in 77 U.S. mutual funds and over $19 billion in 108 ETFs (out of $119 billion in total assets). Yet the Rydex name won't disappear completely.

"Guggenheim Partners is combining all of its asset management capabilities to create one new company, Guggenheim Investments," Guggenheim spokeswoman Jeaneen Pisarra confirmed to MFWire.com. "The idea is to create a global asset management firm that offers a wide variety of products."

According to the wire service, Guggenheim revealed the move yesterday in a webcast to its employees. Benzinga, ETF Database, ETF Trends, IndexUniverse and InvestmentNews also covered the news.

Fundsters may not be surprised by Guggenheim's move. Guggenheim bought Claymore in 2009 and later re-branded its offerings under the Guggenheim Partners moniker [see MFWire.com, 7/31/2009 and 9/27/2010]. And in February 2010 Guggenheim led a group of investors in a $400 million deal to buy Rydex's parent, Security Benefit [see MFWire.com, 2/16/2010 and 8/2/2010]. Then, earlier this year, a report claimed that Guggenheim had plans to combine the old Claymore and Rydex ETF businesses [see MFWire.com, 3/2/2011].

To buy out the other investors in the Security Benefit coalition Guggenheim Partners leads, Guggenheim Partners will make Security Benefit (and thus the coalition it leads) the largest institutional shareholder in Guggenheim Partners. The leadership team for Guggenheim Investments will include: Guggenheim Partners president Todd Boehly as CEO Guggenheim Investments; Don Cacciapaglia as chief administrative officer of Guggenheim Investments; Rydex's Richard Goldman as chief operating officer of Guggenheim Investments; and Guggenheim Partners chief investment officer Scott Minerd in the same role for Guggenehim Investments.

According to Lipper data that, thanks to the new combination, Guggenheim Investments' ETF business will be the eighth largest in the U.S. and the tenth largest in the world, with -- the old Claymore BulletShares fixed-income line boasting wirehouse distribution; and the Rydex CurrencyShares and pure style and equal weight ETFs offering equity, leveraged and inversely leveraged products as well as RIA distribution -- and its overall mutual fund business will be 58th. Guggenheim Investments will have 900 of Guggenheim Partners' 1,900 employees and be based in New York, with significant presence in Chicago and Santa Monica. 60 percent of its distribution is institutional and 40 percent is through intermediaries, but none is direct retail. Watch for Guggenheim to unleash more offerings soon, possibly even acquisitions, but not necessarily fund or ETF mergers.

A source familiar with the situation confided that Guggenheim has no current plans to reduce headcount in the wake of the reorg.

"We're certainly looking to expand the product line, and we think we could move up the ranks rather quickly," Rydex managing director and portfolio strategist Tony Davidow told InvestmentNews. "We're definitely in growth mode and there's quite a bit more we can do from here."

"We've been looking at the Rydex ETF product line and there is not a lot of redundancy or overlap," Guggenheim managing director and product development chief Bill Belden told InvestmentNews. "Going forward ETFs will become one of our core capabilities, and there will be new areas that will be developed.

Meanwhile, Guggenheim will keep the Rydex name alive for the $7 billion line of Target Beta Funds, according to Reuters.

"Other than the Rydex Target Beta Funds, all of the products over time will be re-branded Guggenheim," Pisarra said. 

Edited by: Neil Anderson, Managing Editor

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