After launching just one fund in the last two months of the
year, iShares appears to be on a product development tear to start
2012. The company has already launched a dozen funds in just the
past few weeks, helping to round out their ETF lineup from a
country-specific and broad international perspective. Yet, beyond
these funds, the company was still pretty light in terms of its
exposure to specific sectors in the commodity equity space.
This has likely been to the company’s detriment as these sectors
have proved to be very popular for a number of issuers who
currently occupy the space. Possibly thanks in part to this,
iShares launched five new global commodity producer ETFs targeting
firms from around the globe. Hopefully, from iShares’ perspective,
these new funds will allow the company to regain lost market share
in the popular space and keep the company far ahead of the
competition in total AUM. Yet, while the launches look to be likely
hits for the company, it remains to be seen if any of the new
products, which are listed below, can obtain as many inflows as
some of their counterparts from other issuers have seen.
MSCI Global Agriculture Producers Fund (VEGI)
This new fund looks to track the MSCI ACWI Select Agriculture
Producers Investable Market Index which is a benchmark of companies
engaged at or near the initial phase of agricultural input and
production. The product holds nearly 150 securities in total and
has heavy exposure to companies in the fertilizer and agricultural
products segments as these two industries make up 53% and 23%,
respectively. Top individual holdings go to large caps such
as Monsanto (MON), Potash Corp of Saskatchewan (POT) and Deere
& CO (DE).
In terms of competition, VEGI will likely see heavy competition
from the deeply entrenched Market Vectors Agribusiness ETF (MOO).
The product has nearly $6 billion in AUM and trades close to 1.7
million shares a day, making it one of the most popular sector ETFs
on the market. However, while the funds target similar industries,
MOO holds fewer securities in total and charges investors 56 basis
points a year compared to just 39 for VEGI (read Is USCI The Best
Commodity ETF?).
MSCI Global Energy Producers Fund (FILL)
For a new way to play energy markets, investors might want to
consider FILL, which focuses in on companies that are engaged in
some aspect of the oil and gas supply chain, as well as those that
produce alternative fuels as well. The fund holds just under 300
securities in total, giving heavy weights to major integrated oil
and gas firms, as these securities make up over two-thirds of total
assets. The product also has a heavy tilt towards large caps and
firms from the U.S., UK, and Canada, as these three nations make up
about 65% of the fund.
While there isn’t a whole lot of direct competition, there are a
variety of other funds in the energy space. Currently, there are
close to five dozen funds in the sector although many are far more
specialized than FILL. If anything, the fund could cannibalize
assets from the other iShares energy product, the Global Energy
Sector Index Fund (IXC). This fund has a similar holding breakdown
to FILL but charges investors 48 basis points a year in fees, or
nine more than the new fund (see A Closer Look At HAP).
MSCI Global Select Metals & Mining Producers Fund (PICK)
In the popular broad metal mining space, iShares looks to
capture more assets with its new fund, PICK. The product holds just
over 300 securities and has heavy exposure to diversified metals
and mining with nearly one-third in steel as well. Top holdings go
to a variety of countries as the UK takes the top spot and is
closely followed by Australian and American securities, as all
three nations make up at least 11% of assets. The product charges
39 basis points a year in fees while giving investors a definite
tilt towards large cap securities (read Top Three Precious Metal
Mining ETFs)
For a comparable, but established, fund in the space, investors
have SPDR’s Metals and Mining ETF (XME). The fund has a similar
focus on the mining industry but holds just 42 securities and
charges investors 35 basis points a year in fees. However,
investors should note that XME puts close to 20% of its assets in
precious metal mining firms while PICK excludes these types from
its basket. As a result, XME and PICK may not be directly
comparable, but are likely to share a great deal of commonalities
nonetheless.
MSCI Global Gold Miners Fund (RING)
In what has proven to be an extremely popular corner of the
market, iShares is now taking a crack at the lucrative gold miners
space with RING. The product holds 42 securities in total and
allocates heavily to the big gold miners such as Barrick Gold
(ABX), Goldcorp (GG), and Newmont Mining (NEM). Yet, despite this
large cap focus, the fund does allocate nearly 30% of total assets
to small and mid caps, suggesting a decent tilt away from the
largest firms in the space. In total, the fund puts just under 12%
of its assets to American securities, pushing nearly 56% to Canada
and 12.5% to South Africa instead (see Three Best Gold ETFs).
The current top dog in the space is the Market Vectors Gold
Miners ETF (GDX), an incredibly successful fund from Van Eck. The
product has assets approaching $9.5 billion and sees volume of 12.1
million shares a day, suggesting extremely tight bid ask spreads
for investors. Both funds have a similar focus—including the same
top three holdings-- but RING holds more securities in total and
charges investors 14 basis points a year less in fees.
MSCI Global Silver Miners Fund (SLVP)
If investors are looking for a new way to play the silver
market, SLVP could be an interesting choice. The fund holds just
under 30 securities in total and gives heavy weights to Silver
Wheaton Corp (SLW) and Buenaventura Minas (BVN), which combine to
make up roughly 30% of the portfolio. Additionally, investors
should note that a plurality of the portfolio is in small caps
while U.S. exposure makes up just under 10% of the fund.
The new SLVP looks to face competition from the Global X Silver
Miners ETF (SIL). This product has about $360 million in assets and
sees volume of about half a million shares a day, suggesting that
SIL is quite liquid. Both funds have a similar top holdings list as
well as total amount of securities in the basket, while the
products also both have a heavy focus on international securities.
However, investors should note that SLVP charges investors 39 basis
points a year in fees while SIL currently has an expense ratio of
0.65% (see Time To Consider The Silver Miners ETF).
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