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 - ETF report)
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 - Analyst Report) , 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 - ETF report) . 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 - ETF report)
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 - ETF report) . 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 - ETF report)
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 - ETF report) . 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 - ETF report)
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 - Analyst Report) , 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 - ETF report) , 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 - ETF report)
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 - ETF report) . 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 SIL - ETF report) ">Time To Consider The Silver Miners ETF).
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