Ron Rowland: Global X Funds introduced a new ETF on 4/13/11 targeting the Waste Management industry. Global X Waste Management ETF (NYSE:WSTE) will seek to track an index with one-third allocations to Hazardous Waste, Non-Hazardous Waste, and Recycling stocks.
The fund has an expense ratio of 0.65% and consists of 28 holdings. The three largest hazardous waste stocks are Stericycle Inc. (NASDAQ:SRCL) 10.1%, Sims Metal Management Ltd (NYSE:SMS) 5.7%, and Clean Harbors Inc (NYSE:CLH) 4.7%. The three largest non-hazardous waste stocks are Waste Management Inc. (NYSE:WM) 9.9%, Republic Services Inc (NYSE:RSG) 7.9%, and Waste Connections Inc (NYSE:WCN) 3.5%. The three largest recycling names are Veolia Environnement S.A. (NYSE:VE) 9.6%, Darling International Inc. (NYSE:DAR) 3.4%, and China Everbright International Ltd. (CHFFF) 3.3%.
Constituents currently represent nine different countries. The U.S. has the largest proportion at 54.6%. Others include China 14.9%, France 11.9%, Canada 5.6%, Australia 4.4%, Norway 2.8%, Japan 2.3%, U.K. 1.9%, and South Korea 1.5%.
WSTE will compete mainly against Market Vectors Environmental Services ETF (NYSE:EVX). According to the EVX overview, it has a lower expense ratio of 0.56%, a nearly identical top-ten holdings list to WSTE, and a more than four-year head start on gathering assets. It is not clear that WSTE brings anything to the table to justify its higher expense ratio.
Another question is whether this segment has enough investor interest to support another product. EVX currently has just $31.8 million in assets after being on the market since 2006. Fidelity Select Environmental Services (FSLEX) was launched nearly 22 years ago in 1989, yet assets remained stubbornly below $50 million until last July. At that point, Fidelity changed the name and objective of FSLEX to Fidelity Select Environment and Alternative Energy in an effort to attract additional assets.
The press release (pdf) and WSTE Investment Case (pdf) place a more positive spin on this ETF. Additional information is located in the fund summary and fact sheet (pdf). The prospectus (pdf) also covers three additional funds that are not yet available: Global X Fishing Industry ETF, Global X Food ETF, and Global X Shipping ETF.
Written By Ron Rowland From Invest With An Edge No positions in any of the securities mentioned.
Ron Rowland is the founder of Invest With An Edge and serves as the Executive Editor. He is also editor of AllStarInvestor.com and Chief Investment Officer of Capital Cities Asset Management (www.ccam.com). Quoted widely in the financial media, Ron is the industry go-to guy for sector rotation insight and investment strategies using ETFs and mutual funds.