A New ETF for Diamonds and Gems
December 3rd, 2012 at 6:00am by Tom Lydon
FactorShares, which was acquired by GenCap Ventures in July, helped launch the PureFunds suite of mining exchange traded funds recently, including the first fund to focus on diamond producers and another on small-cap silver miners.
According to the prospectus filing, the PureFunds suite will include three miner ETFs.
The PureFunds ISE Diamond/Gemstone ETF (NYSEArca: GEMS) will follow the performance of the ISE Diamond/Gemstone Index, which includes the largest and most liquid companies that produce, explore and sell gemstones. The underlying index has 23 components, including 20 foreign companies, and the three largest were Signet Jewelers Ltd., Cho Tai Fook Jewellery Group Ltd. and BHP Billiton Ltd, with the largest coming in at 8.7% of the overall portfolio. GEMS has a 0.69% expense ratio.
“Diamonds and other gemstones have traditionally been a difficult asset to invest in because there is no spot or futures market, so we developed an ETF that exclusively invests in companies that produce, refine, sell, or hold gemstone inventory,” Paul Zimnisky, CEO of PureFunds, said in a press release. “We believe new demand for diamonds and other gemstones will continue to come from developing parts of the world where the trend of gifting gemstones is catching on fast. Investors are also driving demand, as gemstones are being bought as a hedge against inflation, the same way precious metals are.”
There are currently no physically- or futures-backed diamond ETFs, but some companies are working on providing the market with the first ETF to track diamond prices. [Diamond ETFs in the Works — Will Investors Bite?]
The PureFunds ISE Mining Service ETF (NYSEArca: MSXX) tries to reflect the performance of the ISE Mining Service Index, which holds companies engaged in facilitating the operations of the mining services industry, such as companies that manufacture, lease, sell and provide equipment, along with those that engage in exploration and extraction. The underlying index held 31 components, including 28 foreign companies. The top holdings include China Coal Energy Company, Atlast Copco and Joy Global, with the largest constituent accounting for 8.9% of the overall index. MSXX has a 0.69% expense ratio.
The PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (NYSEArca: SILJ) tracks the ISE Junior SIlver Index, which fallows small-cap companies that mine, explore or refine silver. The underlying index has 26 components, and 24 are foreign companies. The top holdings include Endeavour Silver Corp., Fortuna Silver Mines and McEwen Mining. The top holding is 11.0% of the index. SILJ has a 0.69% expense ratio.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.