First Trust launched two new ETFs on March 12: First Trust ISE Global Platinum Index Fund (PLTM) and First Trust ISE Global Copper Index Fund (CU). Their names sound like they are commodity ETFs, and perhaps even physically-backed commodity ETFs. However, they are equity funds that invest in stocks. First Trust probably should have added “producers,” “miners,” or “equity” to the names to avoid confusion.
First Trust ISE Global Platinum Index Fund (PLTM) is based on an equity index called the ISE Global Platinum Index, which is designed to track public companies active in platinum-group metals mining based on revenue analysis. Platinum group metals include platinum, palladium, osmium, iridium, ruthenium, and rhodium.
PLTM holds 25 stocks. The largest are MMC Norilsk Nickel JSC ADR (OTCPK:NILSY) 7.9%, Johnson Matthey Plc (OTC:JMPLY) 6.9%, Eastern Platinum Ltd. (OTC:ELRFF) 6.8%, Aquarius Platinum Ltd. (OTC:AQPBF) 6.8%, Lonmin Plc (OTC:LNMIY) 6.6%, Impala Platinum Holdings Limited (OTC:IMPUY) 6.5%, Anglo Platinum Limited (OTC:AAUKY) 6.1%, and Stillwater Mining Company (SWC) 6.0%.
Top country exposure includes Canada 24.4%, South Africa 22.2%, United Kingdom 17.2%, Australia 15.6%, Russia 7.8%, and United States 6.1%. The fund has an expense ratio of 0.70%. Additional information can be found in the PLTM summary and other resources in the PLTM documentation list.
First Trust ISE Global Copper Index Fund (CU) is based on an equity index called the ISE Global Copper Index, which is designed to track public companies active in the copper mining industry based on revenue derived from the sale of copper. CU holds 27 stocks, the largest being BHP Billiton Ltd (BHP) (BBL) 6.8%, Xstrata Plc 6.8%, Antofagasta Plc 6.7%, Freeport-McMoRan Copper & Gold, Inc. (FCX) (Class B) 6.5%, Southern Copper Corporation (SCCO) 6.2%, and MMC Norilsk Nickel JSC ADR 5.0%.
Top country exposure includes Canada 42.3%, United Kingdom 27.1%, United States 13.0%, Australia 6.8%, Russia 5.0%, and Peru 3.0%. Although Chile produces about a third of the world’s copper, its major players are not publicly traded. The fund has an expense ratio of 0.70%, and additional information can be found in the CU summary and other resources in the CU documentation list.
With the introduction of PLTM and CU, investors now have the ability to invest in platinum and copper producers in much the way that Market Vectors Gold Miners (GDX) and Market Vectors Junior Gold Miners (GDXJ) provide access to gold producers. Whether or not there is investor demand for indexed products covering non-gold metal-specific mining companies remains to be seen.
Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.