Global X Funds, best known for its niche emerging market ETFs,
has rebranded one of its ETFs to play global small-cap
Global X S&P/TSX Venture 30 Canada ETF was converted into
Junior Miners ETF (
) and tracks a new index, the Solactive Junior Miners Index. It
includes 96 companies that dig up gold, silver, copper, iron,
nickel, titanium and other basic materials.
"As large miners exhaust existing resources, junior miners are
often poised to explore, develop and monetize new mines to bring
additional supply to the market," Global X said in a statement.
"Investors may also benefit from increased merger and acquisition
activity in the sector, as large mining companies look to
acquisitions and partnerships as additional sources of supply and
Stocks come from more than 10 countries including Canada,
weighted 34%, Australia 26%, the U.S. 18%, the U.K. 7% and China
JUNR will compete with
SPDR S&P Metals &
EGShares Emerging Markets Metals &
Mining ETF (
) and numerous other metal specific mining ETFs.
Metals and miners ETFs rallied sharply last week after the
Chinese government announced new infrastructure projects to
create railways, roads and airports to lift economic growth.
"Let's face it, hard assets are finite and the supply
decreases every day while the global demand increases daily,"
said Anthony Welch, a partner at Sarasota Capital Strategies in
"Lower supply and higher demand equal higher prices -- the
first lesson of any economics class." He believes all portfolios
should have some long-term holdings in basic materials.
New RBS Alternator Note
The Royal Bank of Scotland has rolled out a new exchange
traded note that tracks an index that switches in and out of
RBS US Large Cap Alternator Exchange Traded Notes (
) offers the returns generated from rotating between the S&P
500 Total Return Index, the S&P 500 Low Volatility Total
Return Index and the S&P 500 Equal Weight Total Return Index
based on relative strength.
The indexes are scored based on their performance over the
past one, three, six, nine and 12 months. The fund holds the
index with the highest score every month. The logic is that the
low volatility index will outperform the S&P 500 during bear
and volatile markets, the prospectus states.
The equal-weighted index has the same exposure to all
companies in the index, while benchmark S&P 500 Total Return
is market-cap weighted and has more exposure to the largest
companies. The equal weighted index will likely be more volatile
than the benchmark because it has more exposure to small-cap
Rick Ferri, founder of Portfolio Solutions in Troy, Mich., is
skeptical about this fund. "They have back tested the
index-flipping strategy and tortured the data until it confessed
to adding alpha (returns)," Ferri said. "How can any company
issue a fund that didn't hypothetically beat the market?"
Ferri also doesn't like that it's an exchange traded note,
which is a debt obligation issued by the firm. Changes in the
company's creditworthiness may affect the ETN's value.
The ETN charges an annual management fee of 1% of assets.