Steel ETF Surged as Market Tumbled

VanEck’s SLX quietly outpaced most equity fund peers last year. Can it happen again?

Reviewed by: Heather Bell
Edited by: Heather Bell

One of last year’s top-performing equity exchange-traded funds, the VanEck Steel ETF (SLX), stealthily outperformed broader markets. After 2022’s 14% gain, investors may wonder, can it do so again? 

The ETF is the only one covering steel specifically, investing in global steel producers. It manages $101.3 million in assets, only one-fourth of what it managed in 2008. Still, SLX is about the only way to access the performance of steel directly.  

Those outflows may seem surprising. SLX has performed well in in previous years, with three-and five-year annualized returns of 21.2% and 10.2%, respectively. Still, it’s lost nearly $19 million last year despite its positive performance and its indirect exposure to a key global commodity.  

Although nearly half of the portfolio is invested in U.S. equities, the fund also offers exposure to countries like Brazil (19.4%), the U.K. (10.7%) and Italy (5.6%). Top holdings include Rio Tinto plc (12.4%), Vale, S.A. (12.1%) and Nucor Corp. (6.8%).  

SLX’s liquidity isn’t great, with FactSet rating it at the lowest end of its scale, but SLX’s volumes and spreads are within the normal range relative to other similarly sized equity funds. It’s also not likely to close given it has more than $100 million in assets and has been trading for more than 14 years. Its 0.55% expense ratio is at the low end for a specialty equity ETF.  

It should also be noted that SLX has a dividend yield for the past 12 months of 4.26% versus 1.65% for the SPDR S&P 500 ETF Trust (SPY)

What’s Ahead for Steel 

Steel price gains may be fairly muted this year after having been driven up by supply chain disruptions and the Russia-Ukraine war, but nothing too extreme in either direction, according to Christos Rigoutsos, a senior economist with S&P Global.  

“It's not a matter of weakness in pricing—it's the fact that prices will tend [toward] normal rather than actually being weak or lower than that,” he told, pointing out that steel prices over the past year have been “sky high” and that the situation is simply normalizing.  

He notes that steel producers will idle production when surpluses of the commodity build up. Add that to the fact that prices are already only slightly above cost, there’s not much downside, according to Rigoutsos. However, he also emphasizes steel is not recession-proof, as manufacturing tends to fall off in that kind of environment.  

Given all that, there may be some upside remaining for SLX, while a similar level of outperformance is unlikely to continue very far into 2023. However, its specific focus and global nature could provide additional diversification to a portfolio with little added risk.  

With recession fears high, a fund focused on companies producing a crucial commodity could be seen as an attractive prospect. 


Contact Heather Bell at [email protected] 


Heather Bell is a former managing editor of She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.