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