Quick Investor Guide To Mining Industry ETFs [Molycorp Inc, SPDR S&P Metals and Mining (ETF)]

The S&P Metals & Mining Select Industry Index represents the metals and mining sub-industry portion of the S&P Total Market Index. With AUM of $589 million, XME is the largest and most popular fund in the metals and mining space. It has a trading volume of roughly 2.9 million shares a day, suggesting little or no extra cost in the form of bid/ask spreads. The ETF is a low-cost choice, charging a net expense ratio of 35 basis points a year, while the dividend yield is 1.36% currently.

The fund currently holds 40 stocks in its basket, with only 34.12% of assets in the top 10 holdings with weightage of around 3% each. From a commodities perspective, the product is heavily weighted toward steel with 35% sector weightage, followed by diversified metal and mining (20%), coal and consumable fuels (16%), precious metals (11%), gold (10%), and aluminum (8%).

Among individual holdings, top stocks in the ETF include AK Steel Holding Corporation (NYSE:AKS), Allied Nevada Gold Corp. (NYSE:ANV), and Molycorp, Inc. (NYSE:MCP) with asset allocation of 3.82%, 3.74% and 3.56%, respectively. (Read: MLP ETFs—Still Good for Income Investors?)

iShares MSCI Global Metals & Mining Prdcrs (NYSEARCA:PICK)

The ETF seeks to match the price and yield performance of MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index.  This index measures the equity performance of companies in both developed and emerging markets that are primarily involved in the extraction and production of diversified metals, aluminum, steel and precious metals and minerals, excluding gold and silver.

Launched in Jan 2012, the fund has so far attracted AUM of $134 million. It has a trading volume of roughly 19,483 shares a day. The ETF is currently charging a net expense ratio of 39 basis points a year, with a dividend yield of 3.58%.

The fund currently holds 240 stocks with 99.66% sector weightage toward basic materials. The fund allocates nearly 52% of the assets in the top 10 firms, which suggests that company-specific risk is somewhat high, as the top 10 holdings dominate half of the returns. Among individual holdings, top three stocks in the ETF include BHP Billiton Limited (BHP), Rio Tinto plc (RIO) and BHP Billiton plc (BBL) and with asset allocation of 13.3%, 8.2% and 7.8%, respectively.

The fund is widely diversified across various countries, and UK tops the list, holding 21.37% of the fund, followed by Australian (19.76%) and American securities (14.35%). These three nations make up for nearly 55% of the assets.

This article is brought to you courtesy of Eric Dutram.

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