Van Eck, the New York-based fund manager behind the Market
Vectors ETFs, filed paperwork with U.S. regulators to market a fund
that would invest in global chemical companies, the first fund to
serve up fine-tuned exposure to chemicals that are often found in
broader-based materials sector strategies.
The Market Vectors Global Chemicals ETF would track a
proprietary index comprising securities of companies in the United
States as well as globally that derive at least half of their
revenues from the research, development, manufacture and marketing
of chemicals and related services.
The fund, which would join an extensive roster of Market Vectors
global sector ETFs that canvass a wide variety of
industries-including pharmaceuticals, strategic metals, nuclear
energy and biotech names-would be a first of a kind.
Sector funds have been widely explored by ETF providers,
including Boston-based State Street Global Advisors and San
Francisco-based iShares. But none of the sector fund lineups so far
includes a chemicals-only portfolio.
Chemicals are an important, if underappreciated, part of the
global economy. Used for everything from plastics to paints,
chemicals come into play in all kinds of products and all kinds of
industries, putting them at the silent center of world economic
growth, the strongest in recent years coming from emerging
Funds like the iShares S&P Global Materials Index Fund
(NYSEArca:MXI) serve up some exposure to chemical companies, but
that exposure is diluted across other materials segments. The
nearly $500 million fund allocates roughly 40 percent of its
portfolio to chemicals, iShares said on its website.
Van Eck's planned ETF will include all levels of market
capitalization, including the small- to midcap names, and may rely
on depositary receipts not included in the index as well as other
derivative instruments to achieve the exposure it seeks.
The Market Vectors Global Chemical Index underlying the ETF is a
rules-based, modified capitalization-weighted float-adjusted
benchmark that excludes companies with a market capitalization
smaller than $150 million and requires stocks to have a three-month
average daily trading volume of at least $1 million.
As of February, the index comprised 158 securities with an
average market capitalization of $7.8 billion, the company said in
the filing. It rebalances twice a year.
Van Eck didn't include the fund's proposed expense ratio or
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