Daily ETF Watch: Jr. Miners Fund Debuts

March 31, 2015

ALPS and Sprott Asset Management, which specializes in precious metals, today are rolling out a companion fund to the $184 millionSprott Gold Miners ETF (SGDM | D-67). The new fund targets smaller-capitalization stocks, but like SGDM, it is managed by ALPS Advisors and tracks an index developed by Sprott and Zacks Research.

 

The Sprott Junior Gold Miners ETF (SGDJ), like its predecessor SGDM, covers U.S. and Canadian stocks that mine silver and gold, but it selects them in a different way. The underlying index’s components must meet certain liquidity requirements and have a market capitalization between $250 million and $2 billion, though the lower threshold can be lowered if it leaves the index with less than 30 constituents. The index uses a modified market-capitalization-weighting methodology that caps individual components at 9 percent of the index.

 

Interestingly, the index is required to maintain an 80 percent/20 percent split between companies that primarily mine for gold and companies that primarily mine for silver.

 

Perhaps the closest competitor is the $1.7 billion Market Vectors Junior Gold Miners ETF (GDXJ | C-45), which tracks a similar segment of the market. However, GDXJ is far more global in nature, with sizable weights in eight different countries.

 

SGDJ is fairly in competitive in price with GDXJ, charging 57 basis points, or $57 for each $10,000 invested, compared with GDXJ’s 55 basis points.

 

 

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