New ETFs to feed the metals frenzy

GLTR is the first exchange-traded fund with exposure to gold, silver, platinum and palladium.

By TheStreet Staff Oct 26, 2010 10:28AM

Gold © Comstock Images/JupiterimagesBy Don Dion, TheStreet


The metals industry continues to be a wildly attractive region of the market for ETF sponsors. Gold, silver and other precious metals, in particular, are drawing huge crowds as investors seek out ways to protect against rampant market volatility.


This has led fund companies to further increase the number of products available that track these metals.


Recently, ETF Securities, a relative newcomer in the U.S., launched ETFS Physical Precious Metals Basket Shares (GLTR), the first fund aimed at providing investors access to a physical combination of gold, silver, platinum, and palladium.


Though the fund is still new, I predict it will quickly become a force to be reckoned with among precious-metals ETFs.

Given the popularity of precious-metals funds, it is not surprising that companies are looking to expand the selection of base-metal ETFs as well.


Though less glitzy than gold and silver, base metals such as copper, aluminum and tin are used extensively across a number of industries, making them essential components for economic growth. They appeal to bullish investors confident that the global economy is recovering.


In recent days, JPMorgan (JPM) filed paperwork to launch the JPMorgan Physical Copper Shares. Like physically backed gold and silver funds such as iShares Gold Trust (IAU) and iShares Silver Trust (PALL), this fund will track the performance of a physical stockpile of copper.


Market Vectors has also hopped onto the metals bandwagon, filing paperwork for the Market Vectors Rare Earth/Strategic Metals ETF, which will trade under the symbol REMX. This is slated to be the first U.S.-listed ETF aimed at tracking the performance of popular rare-earth elements.


These new products will join an already large body of ETFs designed to track the performance of this class of metals. The PowerShares DB Base Metals Fund (DBB) provides investors with equally weighted access to a basket of aluminum, copper and zinc futures contracts. A fund such as the SPDR S&P Metals & Mining ETF (XME) is another option for investors looking for a broad play on metals. This fund tracks a collection of companies responsible for unearthing all types of metals.

While this type of broad-based product may be attractive to conservative investors looking for general exposure to base metals, aggressive investors may find more promise in funds that track the performance of these metals individually.


Prior to the news of JPMorgan's foray into the copper markets, the red metal has been a particularly popular focus for ETF issuers. Using funds currently available, investors can play this red metal from a number of different angles.


The iPath Dow Jones UBS Copper Subindex ETN (JJC) is designed to track the performance of futures contracts, while the Global X Copper Miners ETF (COPX) follows a basket of mining companies.


Investing in an individual metals such as copper can be exciting. However, it is important to remember that, given the volatile nature of the current economic recovery, these funds can be particularly susceptible to market swings.


I do not foresee interest in metals waning anytime soon. Rather, I expect demand for these industry-linked metals to further increase as the economy continues to recover.


In order to take advantage of their popularity, fund companies will likely come to market with more new products aimed at tracking this region of the market. Investors should keep an eye out for new funds down the road.


Related Articles



Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124 rated 1
266 rated 2
452 rated 3
702 rated 4
671 rated 5
604 rated 6
640 rated 7
495 rated 8
267 rated 9
158 rated 10

Top Picks




Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.