Guggenheim big resigns amid merger rumors

Steve Baffico, head of U.S. retail at Guggenheim Funds Distributors Inc., has resigned. The move comes amid renewed rumors that the firm’s parent, Guggenheim Partners LLC, is merging its former Claymore Group Inc. exchange-traded-fund business with its Rydex SGI business.
Jeaneen Pisarra, a Rydex spokeswoman, confirmed that Mr. Baffico has left the firm “to pursue other opportunities,” and that he was replaced by Chris Parisi, national sales manager and senior managing director at Guggenheim Funds Distributors. She declined to comment on whether Guggenheim is reorganizing.
“Guggenheim Funds and Rydex SGI continue to leverage their respective expertise and look for ways to work together,” she said.
Last spring, rumors began circulating that Guggenheim Partners was merging Claymore and Rydex. Guggenheim bought Claymore in October 2009 and inherited Rydex in 2010 as the lead investor in buying Security Benefit Corp., which owns Rydex SGI.
Those rumors have started up again, according to at least three people familiar with the situation. And the word is that Rich Goldman, chief executive of Rydex SGI, will be the head of the combined company.
Jeff Kelley, a spokesman for Guggenheim, declined to comment.
Rydex, which has $9.2 billion in ETF assets and 0.84% of ETF market share, is the eighth-largest seller of exchange-traded funds. Guggenheim, which has $3.7 billion in assets, has 0.34% market share and is ranked 16th, according to Morningstar.
A merger, if completed, would result in the seventh-largest ETF provider in the U.S,, according to Morningstar Inc.
Such size could be a selling point. “Scale is good in this business,” said Scott Burns, an analyst at Morningstar Inc., who had not heard the rumors.
It would also make sense for Guggenheim to create a separate sales force devoted exclusively to ETFs, rather than having the same wholesalers selling both mutual funds, which offer commissions, and ETFs, which don’t.
“If you give a wholesaler the option of selling the thing with a commission and the thing that doesn’t, you know what they are going to focus their energy on,” he said.