2013 was pretty rough for mining ETFs. A stronger dollar, the Fed’s QE taper concerns and overall demand-supply imbalance left the space in distress. And with the ongoing Fed tapering, though measured, mining ETFs might stay out of favor even this year.
This has made it difficult for mining ETFs to accumulate assets, as investors are opting for high potential sectors, a rebounding Europe, and to some extent, a fast-improving Japan. Amid such a scenario, PureFunds’ decision to shut down 2 mining ETFs does not come as too much of a surprise (read: Metal Mining ETFs in Trouble?).
The funds to be closed – PureFunds ISE Diamond/Gemstone ETF (NYSEARCA:GEMS) and PureFunds ISE Mining Service ETF (NYSEARCA:MSXX) –entered the market in late November 2012. The duo will trade for the last time on January 23, 2014.
Why the Closure?
Notably, GEMS and MSXX had the smallest share of assets of the commodity producers’ equities ETFs space. While the space bellwether Market Vectors Gold Miners ETF (NYSEARCA:GDX) boasts $4.3 billion in assets, GEMS and MSXX accumulated only $1.1 million and $0.8 million of assets, respectively. Such poor asset bases even after a year of launch suggests that the funds never took off in that sense.
This clearly explains why PureFunds chose to abandon these funds. With these closures, PureFunds will have only one ETF – PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (NYSEARCA:SILJ) – trading in the mining space, that too with low assets under management.