SSgA To Join Commodities ETF Bonanza


SSgA will enter a market already occupied by the iShares S&P GSCI Commodity-Indexed Trust ETF (NYSEArca:IGE). IGE is an ETF with a North American focus that weights energy at 71.25 percent, compared with 63.6 percent for SSgA's planned global fund. Other funds in the space include the Jefferies | TR/J CRB Global Commodity ETF (NYSEArca:CRBQ) and the Market Vectors RVE Hard Assets Producers ETF (NYSEArca:HAP).

The proliferation of natural resources ETFs reflects a global boom in commodities over the past 10 years. Rapid development in emerging market countries-particularly China and India-is behind spiking demand for basic materials such as oil, which is now about 70 percent higher in price than in 2000.

Using a replication strategy to mirror the S&P Global Natural Resources Index, the new fund will invest at least 80 percent of total assets in the securities in the index, which is composed of 60 of the largest publicly traded companies in the global agriculture, energy, and metals and mining sectors.

Index constituents will be weighted according to market capitalization but are capped so that no single security exceeds 5 percent of total assets. The fund may also invest in stocks not listed in the index, as well as futures, options, swap contracts, and other derivatives, according to the filing.

The S&P Global Natural Resources ETF will trade on the NYSE Arca platform under the ticker symbol GNR. State Street didn't specify expense ratios for the new fund in its filing.

IGE has an expense ratio of 0.75, while CRBQ and HAP charge investors 0.65 percent a year in fees.

SSgA Fund Management will serve as investment adviser to the fund.

As of December 31, 2009, the global energy sector was the most heavily weighted in the S&P Global Natural Resources Index, accounting for 63.6 percent of listings. The metals and mining sector accounted for 26.9 percent, and the agriculture sector made up the remaining 9.5 percent. The top three holdings at the end of last year were BP, Chevron, and Total SA, the French energy firm.

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Copyright ® 2010 Index Publications LLC . All Rights Reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , ETFs

Referenced Stocks: CRBQ , HAP , IGE



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