FactorShares, the ETF provider recently acquired by GenCap Ventures, filed updated paperwork with U.S. regulators detailing plans to market equities ETFs that would invest in miners and explorers, penning in tickers and fees for the funds.
The strategies would further slice and dice a segment populated by the likes of the U.S.-focused $740 million SPDR S&P Metals and Mining ETF (NYSEArca: XME), the global Market Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX) or the iShares MSCI Global Select Metals & Mining Producers Index Fund (NYSEArca: PICK).
In this latest filing, FactorShares disclosed that its three miner-linked funds, all of which would replicate ISE benchmarks that target foreign companies and a smattering of U.S. names, would each have 0.69 percent annual expense ratios.
The funds, their tickers and investment strategies are as follows:
- The PureFunds ISE Diamond/Gemstone ETF (NYSEArca: GEMS) will invest in the largest and most liquid companies that produce, explore and sell gemstones. The fund’s underlying index comprises some 26 names, the bulk of which are non-U.S. companies. Petra Diamonds Ltd., Harry Winston Diamond Corp. and Chow Tai Fook Jewellery Group Ltd. are among the top holdings.
- PureFunds ISE Mining Service ETF (NYSEArca: MSXX) will invest in companies that facilitate the operations of mining services such as those that manufacture, lease and sell equipment to companies that provide consulting or other services to the industry as well as those that work with actual exploration and extraction. The ISE index benchmarking the fund included 31 names in July such as Mineral Resources, China Coal Energy Company H Shares and Joy Global Inc.
- PureFunds ISE Junior Silver ETF (NYSEArca: SILJ) will invest in small-cap silver miners and explorers including those that mine, explore and refine silver. The 28-holding index underlying the strategy had Endeavour Silver Corp., Fortuna Silver Mines Inc. and McEwen Mining Inc. among its top names.
FactorShares already sponsors a quintet of leveraged spread funds, but its latest move would be the first under its new management.
FactorShares was acquired by Gencap in July, a company that aims to help clients bring to market ETFs under the Securities Act of 1933 and the Investment Company Act of 1940, including both passively and actively managed ’40 Act ETFs.
Gencap’s business model represents a budding new trend in the ETF space featuring investment managers entering the ETF market with the help of a third party. The third parties provide interested asset managers with infrastructure and platform in order to launch their ETFs, saving them the trouble of trying to build an ETF unit from scratch.
Other companies serving up the “ETF-In-A-Box” concept include the Oklahoma City-based Exchange Traded Concepts—the firm behind the Yorkville MLP ETFs—as well as Bethesda, Md.-based AdvisorShares, which helps others bring ETFs to market that use the AdvisorShares brand name.
Factor Advisors LLC will serve as the investment advisor to the funds, while Esposito Partners LLC will be the subadvisor.
Esposito Partners is related to Dallas-based Esposito Securities, a trading firm that has also been involved in providing seed capital for new ETFs.