Despite what you may have read, Guggenheim did not launch any new ETFs last week. You can safely ignore the headline in the Guggenheim press release. What really happened is buried deep within that press releasewhose headline is totally wrong: as of June 1, 2011, some already-existing ETFs received new names, new objectives, and deceptively higher expense ratios.

Claymore U.S. Capital Markets Bond ETF (USB), was launched more than three years ago, only attracted $5.3 million in assets, traded rarely, and became a regular member of ETF Deathwatch. Rather than admit failure by closing USB, Guggenheim has given it a new name, new ticker symbol, and new objective. The CUSIP and the 3-year track record did not change. This ETF has been repackaged as Guggenheim Enhanced Core Bond ETF (GIY).

Claymore U.S. Capital Markets Micro-Term Fixed Income ETF (ULQ) had a similar story, except that it attracted nearly $20 million in assets. On 6/1/11, ULQ morphed into Guggenheim Ultra-Short Bond ETF (GSY).

I’ll say it again so we are all perfectly clear: GIY and GSY are not new ETFs. They are Extreme Makeovers of previously-launched products. ETF sponsor Claymore pioneered this process in July 2009 when Claymore/Great Companies Large-Cap Growth Index ETF (XGC) mysteriously became the Claymore/BNY Mellon International Small Cap LDRs ETF (XGC). I highly suggest clicking the link for some background.

Here the plot thickens. Around the same time XGC changed its stripes, Claymore was acquired by Guggenheim but continued operating under the Claymore name. I do not know for a fact that the sponsor’s ownership change had anything to do with the Extreme Makeover of XGC, but the timing was certainly convenient.

In any case, in August 2010 Claymore/Guggenheim did it again, transforming Claymore/Sabrient Stealth ETF (STH) into Claymore Wilshire Micro-Cap ETF (WMCR). I contacted Claymore at the time to ask for an explanation. I was told that they chose the cosmetic surgery option because of the “critical mass” behind STH and the “cost benefits” of not having to close one fund and open another.

In September 2010, Guggenheim had assimilated its new acquisition enough to drop the Claymore name from most products. UBD and ULQ were left out of the rebranding, making me speculate something unusual was in the works. Indeed it was.

Guggenheim Enhanced Core Bond ETF (GIY)is now an actively-managed ETF that attempts to outperform the Barclays Capital U.S. Aggregate Bond index. The fund’s advisor (Guggenheim Funds Investment Advisors, LLC) uses a quantitative strategy which attempts to identify and capitalize on relative mispricing of securities. GIY has a stated expense cap of 0.27%, but there are many expenses that fall outside this cap, producing actual net operating expenses of 3.66% (a cap that’s not a cap). Additional information is on the GIY overview page.

Guggenheim Enhanced Ultra-Short Bond ETF (GSY) is now an actively-managed ETF. Its low-duration strategy seeks to outperform the 1-3 Month Treasury Bill Index. GIY has a stated expense cap of 0.27%, but there are many expenses that fall outside this cap, producing actual net operating expenses of 3.37% (another cap that’s not a cap). Additional information is on the GSY overview page.

To do what they are doing with actively-managed ETFs, Guggenheim must have received exemptive relief from the SEC. They apparently elected to keep the news quiet until now. The February 2008 launch date makes GIY and GSY the longest-living actively-managed ETFs in existence. Both have 3-year track records but were not actively managed for most of that time. Be sure to read the footnotes if it sounds like they are claiming otherwise.

Bottom line, it appears to me that Guggenheim has not taken any steps to change the tricks employed at Claymore in the past. In fact, they may even be taking the game to a new level with their expense cap disclosures.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.