Digging Deeper Into Metals And Mining ETFs

May 20, 2008 at 1:00 am by Tom Lydon

Miner2 As commodities become all the rage with investors, commodities exchange traded funds (ETFs) have proliferated alongside them.

ETF Expert’s Gary Gordon for Equities Magazine has five mining-focused funds that might fit an investor’s risk profile:

  • Market Vectors Gold Miners Fund (GDX):  As investors turned to gold as a safe haven earlier this year amid Federal Reserve rate cuts, this ETF received some attention. On average, more than 4,000,000 shares of GDX trade in a day. The index targets 30 companies around the world that mine gold and silver. The ETF is 77% concentrated in Canada and South Africa. A sharp drop in the price of gold could hit this fund hard, though. Year-to-date, it’s up 3.4%.
  • SPDR S&P Metals and Mining (XME): This ETF benefits from the global infrastructure demand and tracks 25 companies in the material/energy acquisition business. It is diversified across steel producers, coal miners, and zinc and palladium extractors. Year-to-date, it’s up 27.4%.
  • Market Vectors Coal (KOL): Foreign exposure is key with untapped, emerging markets such as Thailand and Indonesia as the base. This ETF is made up of both coal producers and coal consumers. It’s one of the easier ways to directly capitalize on growing demand for the commodity. It’s up 26% since its Jan. 15 inception.
  • iShares MSCI Chile Fund (ECH): Copper is the commodity of choice in this fund, as Chile is responsible for one-third of the world’s copper production. Year-to-date, it’s up 4.7%. Copper is used in every major industry, and growth among emerging markets will only further fuel demand for it.
  • iShares MSCI South Africa Index (EZA): Natural resources go with South Africa like salt goes with pepper, and the ETF follows correlated segments of the country’s economy, including materials, energy, metals, and commodities. This ETF might appeal to aggressive investors. Year-to-date, it’s up 5.2%.

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    • Ultra PowerX ETF: I love all the ETF variety that’s coming out lately, but I want more!!! Somebody please help...
    • Jack Russell: nice work Jack
    • Tom Lydon: Yes, sbenard, generally that is true that an index’s existence doesn’t mean there will be an...
    • sbenard: I confess I’m a fan of Jim Rogers. He one of the most no-nonsense investors I know. But unless I read...
    • Odd Lot: Great post, Tom, and I totally agree that there is going to be an ETF explosion in 401k’s over the...