Market Overview

Whatever Happened to...The Dunder Mifflin ETF?

Before answering that, we should clarify there is no ETF devoted to the fictitious paper company made popular in the American version of "The Office," which airs on NBC. If a Dunder Mifflin ETF did exist, it would probably be the Guggenheim Timber ETF (NYSE: CUT).

Avid fans of "The Office" might remember one of the episodes when Michael is preparing to start his own paper company and Jim tells him paper is a dying industry. There might be something to that. The ETF is off almost 14% in the past year and that number would be far worse if not for a curious 10% pop to start 2012.

S&P Capital IQ rates CUT underweight and said in a recent note "now is not the time to add CUT to portfolios."

To its credit, CUT has attracted $113.4 million in assets under management. That's an excellent total considering the ETF focus on a somewhat obscure niche and that its debut in late 2007, just as the housing market was weakening, could have meant this fund went to ETF graveyard. It obviously has not.

"From its initial price of $25, CUT fell to a low of $7.43 in early March of 2009. Subsequently, however, the ETF rose strongly over a two-year period until April 2011 when it nearly got back to its offering price by hitting $23.35. The ETF suffered for much of the balance of 2011 along with most materials stocks, and it was recently trading at $17.11. Due to the relatively limited number of companies and the narrow focus of this ETF, we think it has a higher risk profile than many other ETFs," S&P Capital IQ said in its research note.

What CUT does do is hold 27 stocks with seven of the top10 holdings being paper or packing plays. CUT offers exposure to 10 countries with the U.S. and Japan accounting for 59% of that allocation. Brazil and South Africa give CUT some emerging markets exposure, but the rest of the country weights, including Finland, Sweden and Canada, are developed markets.

No, paper isn't the most exciting industry out there, no matter what Michael Scott says. And yes, S&P's assessment could prove accurate. All that said, it pays to note perception is reality and what the perception of CUT, along with its rival the iShares S&P Global Timber & Forestry Index Fund (Nasdaq: WOOD), is.

It is that these ETFs are plays on a recovering U.S. housing market. Indeed, there are ETFs for that very things, but CUT might be worth a look along the same lines regardless of its lack of exposure to homebuilders.

CUT doesn't offer much in the way of yield, but active traders might want to give the ETF a whirl if it can move above the 200-day line around the $18.20 area. CUT has an expense ratio of 0.65%.

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