It’s been an exciting start to the month of June for the ETF industry, with announcements of new funds coming seemingly on a daily basis. Already this month Old Mutual, ProShares, Global X, BMO, WisdomTree, IndexIQ, and Grail Advisors have expanded or announced plans to expand their ETF product lines. Included in these launches were several noteworthy funds, including the first Peru ETF (Global X), additional actively-managed funds (Grail), and strategy-specific hedge fund ETFs (WisdomTree and IndexIQ). Now we can add two more launches to this impressive list, each offering a new take on indirect commodity investing.
Van Eck Files for New Mining ETF
Van Eck Global has filed with the SEC for a new ETF that will target small- and mid-cap gold and silver mining companies. The new ETF will follow a passive strategy in an effort to track the performance of an index holding small mining companies. The Market Vectors Gold Miners ETF (GDX), which tracks larger mining companies, is a popular choice for investors seeking indirect exposure to gold.
In addition to differences in size, the operations of small gold miners are often significantly different than those of their larger counterparts. Small mining companies tend to be in the exploration phase, whereas larger miners have less speculative operations. As such, smaller miners often require additional capital injections to continue their operations.
ALPS Fund Services Entering the ETF Arena
If you recognize the ALPS name, it’s probably because they are well known as a provider of administration, accounting, distribution, and compliance services to a number of mutual funds and ETFs, including several State Street funds. Now ALPS is expanding its line of internally-developed ETFs, filing with the SEC to launch five new funds, including:
- Commodity Producers Composite ETF: Will track the performance of companies engaged in the production an distribution of commodities in the agriculture, industrial metals, energy, and precious metals sectors
- Agriculture Producers ETF: Will track the performance of companies engaged in the production and distribution of agricultural products
- Energy Producers ETF: Will track the performance of companies engaged in the production and distribution of energy products, including petroleum and natural gas
- Industrial Metals Producers ETF: Will track the performance of companies engaged in the production and distribution of industrial metals, including copper, aluminum, and steel
- Precious Metals Producers ETF: Will track the performance of companies engaged in the production and distribution of precious metals, such as gold, silver, and platinum
Along with the news that net May ETF inflows were more than $14 billion, this recent flurry of new fund launches leaves no doubt that the ETF industry continues to grow at a remarkable pace. The vast majority of these new funds are offering exposure to indexes previously not covered by ETFs, indicating that we’re far from reaching a saturation point of the current boom.