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 markets.
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 ticker.
If CalPERS is taking hedgies out, ETFs may be coming back in.
‘Smart beta’ almost surely means loss of more market share for active managers.
Be careful of your assumptions (and headlines!) about volatility ETFs.
WBIG hedges in some areas and bets big in others.