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Van Eck’s Niche ETF Strategy Is A Proven Success In Winning Investor Assets

October 30th, 2009

strategy“While the ETFs business is booming, it’s one that remains dominated by a handful of large players like Barclays PLC (BCS) and State Street Corp. (STT). Success has eluded many smaller companies. Of 26 exchange-traded-fund providers ranked by assets by the National Stock Exchange, Van Eck is sixth. Its annual ETF revenue, based on those funds’ expense ratios, may exceed $50 million,” Ian Salisbury Reports From The WSJ.

“Van Eck’s first ETF, Market Vectors Gold Miners ETF (GDX), which hit the market in May 2006, aims to help investors bet on gold through the stock market rather than by buying the metal directly, the approach taken by SPDR Gold Shares (GLD), a fund marketed by State Street that had appeared two years earlier. Van Eck’s fund hasn’t proved nearly as popular–SPDR Gold Shares now holds more than $35 billion–but it’s proved popular enough. With gold prices on a tear, the gold miners ETF has a still-impressive $5 billion, making it by far Van Eck’s biggest success,” Salisbury Reports.

“While Van Eck’s niche strategy seems to have succeeded in winning investor assets, it does open the company to the charge its funds are opportunistic or gimmicky, tempting investors to chase hot returns, a criticism that has dogged the ETF industry for years. Moreover, some of Van Eck’s marketing tactics–such as distributing I-beam-shaped paper weights to promote its steel ETF and giving the agribusiness fund the ticker “(MOO)”–reinforce that image,” Salisbury Reports.

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