Global X Debuts First Aluminum Equities ETF

January 05, 2011

Global X rolls out the world’s first pure aluminum equities ETF.

Global X Funds, the New York-based fund company known for its exchange-traded funds focused on emerging markets and commodities, on Wednesday rolled out a first-to-market aluminum equities ETF that hones in on companies specializing in the widely used industrial metal.

The company hopes its new Global X Aluminum ETF (NYSEArca: ALUM) will tap directly into the booming global infrastructure story. Aluminum, which is both lightweight and recyclable, is increasingly popular as concerns surrounding environmentally friendly construction and energy consumption mount.

“No other ETF out there captures the aluminum mining and production industry,” Alex Ashby, research analyst for Global X Funds, told IndexUniverse in a telephone interview. “Aluminum is an important commodity in the development story; it’s an industrial metal used in many different products.”

Up until now, investors seeking pure and direct exposure to the base metal could only get it through the futures-based iPath Dow Jones-UBS Aluminum Sub Total Return ETN (NYSEArca: JJU).

Investors could also get less-than-precise futures-based exposure through broader-based metals ETFs such as the PowerShares DB Base Metals (NYSEArca: DBB), which invests in aluminum, copper and zinc futures. In addition, the Vanguard Materials ETF (NYSEArca: VAW) invests in materials companies, but has just a 3 percent allocation to aluminum names.

Solactive Index

ALUM, which will replicate the Solactive Global Aluminum Index, a free-float adjusted market capitalization-weighted index that tracks global companies involved in the aluminum industry, reflects Global X Funds’ long-term focus on commodity ETFs, Ashby added.

“We are always looking for industries, regions or countries where the economic fundamentals are strong,” Ashby said. “We believe in the continued development and industrialization of emerging markets, which is a solid foundation for commodities investing.”

ALUM comes with a price tag of 0.69 percent a year, cheaper than most comparable funds in the space, though more than the 0.24 annual expense ratio Vanguard charges on VAW. The Vanguard materials ETF has nearly $650 million in assets under management.

Part Of A Bigger Lineup

The fund is part of the seven-ETF lineup Global X filed to offer in April of last year.

Several of those are already on the market, including the Global X Copper Miners ETF (NYSEArca: COPX), the Global X Lithium ETF (NYSEArca: LIT), the Global X Silver Miners ETF (NYSEArca: SIL), the Gold Explorers ETF (NYSEArca: GLDX) and the Global X Uranium ETF (NYSEArca: URA).

The company has yet to launch its planned Platinum Miners fund; additionally, it hasn’t said what the fund’s ticker symbol would be.


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