GDX's Index Gets A Revamp

October 23, 2013

Effective Sept. 23, the NYSE Arca Gold Miners Index underwent some major changes, including opening its portfolio to international holdings to further diversify it. The benchmark underlies the Market Vectors Gold Miners ETF (GDX | A-53), the world's biggest gold miner ETF.

The index not only expanded its universe of securities to include non-U.S.-listed companies via depositary receipts, it also began excluding companies with less than $750 million in market capitalization from being considered for inclusion.

A "buffer zone" around the $750 million market-cap floor is designed to reduce turnover during quarterly rebalances. The buffer allows for any company already in the index that has more than $450 million in market capitalization to remain in the index and not have to meet the initial inclusion criteria of $750 million, according to NYSE Euronext.

The exchange said that expanding the index to include international companies would result in a better representation of the gold mining industry, while the increase in minimum market capitalization would clearly differentiate it from the exchange's junior gold miners index.

In addition to GDX, the index also underlies the Direxion Daily Gold Miners Bull 3x Shares (NUGT).

 

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