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Tuesday, January 4, 2011

Top ETF for 2011 ( Metals )

Top ETF for 2011 ( Metals )
NEW YORK (TheStreet) - Precious and base metals proved to be popular themes for ETF sponsors over the past year. While some companies took to launching products which tapped into previously unexplored corners of the metals industry, others offered up new ways to gain exposure to old favorites.

Here are some of the most interesting precious- and base metal-related products which were introduced in 2010.

ETFS Physical Palladium Shares and ETFS Physical Platinum Shares

Palladium saw some of the strongest performance across the broad commodity spectrum in 2010 and ETF Securities, a relative newcomer to the U.S. ETF industry, enjoyed a lot of success last year with the launch of PALL and PPLT.

Designed to track physical stockpiles of palladium and platinum respectively, these two products benefited as investors sought out precious metals that would benefit as the global markets continued along the road to recovery.

Although they are still just under a year old, the two funds have generated impressive followings, boasting over $700 million in assets each.

On top of increasing the number of options investors can use when looking for physical precious metal exposure, PALL and PPLT also pose as suitable proxies for those seeking exposure to the automobile industry. Platinum and palladium are used extensively in the production of catalytic converters and have managed to power higher as the industry continued to heal.

ETFS Physical Precious Metals Basket Shares

Following the successful launches of PALL and PPLT, it wasn't until October that ETF Securities resurfaced with its next new product, GLTR. Whereas in the past, companies such as PowerShares had attempted to capture the strength of multiple precious metals under one roof by utilizing futures contracts, GLTR is the first fund to combine exposure to gold, silver, platinum and palladium from a physical perspective.

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This investing strategy allows investors to take a broad based approach to precious metals and benefit as general demand for these commodities increases.

Global X Copper Miners ETF
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Copper has long been an attractive metal for investors looking for a way to capture economic growth. Used extensively in construction and infrastructure, this red metal tends to perform best in times of market optimism. Thanks to the advent of exchange traded products, investors have been introduced to a number of options which can be used to access the copper industry.

Although it was not the first fund launched in 2010 that took a concentrated look at copper producers, COPX has managed to gain a leg up on its competition thanks in large part to its reduced expense ratio.

Global X Lithium ETF

Global X gained considerable traction in the ETF industry in 2010. Once reliant on the success of a small number of international-focused ETFs, the company's family of funds has expanded to include a collection of funds which target various regions of the metals industry as well.

One of the more unusual launches to come from this company in 2010 is LIT. Lithium has long been used in a number of industries. However, more recently, the commodity has received a lot of fanfare as investors show increasing interest in clean energy sources such as batteries.

Due to its concentrated focus on such a small facet of the broad economy, LIT may not be appropriate for long term, conservative investors. However, short- term players comfortable with taking a risk may find the fund's volatile action attractive in 2011.

Market Vectors Rare Earth/Strategic Metals ETF

One of the last fund launches of 2010, REMX has managed to get off to a running start. The timing of this fund's launch was impeccable. In the weeks following REMX's introduction, China has announced its plans to curb rare element exports in 2011 which, in turn, has caused top REMX components including Molycorp and Lynas Corp to take off in a big way.

Rare earth elements are used heavily in the production of handheld devices such as smartphones. Therefore, it is no question that these metals will remain in the headlines as more people around the world turn to these gadgets to stay up to date with our increasingly fast paced, interconnected world.

Written by D,Dion
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