ETF Launches This Week: Copper and Silver Producers, South Korean Small Caps

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Includes: CNDA, COPX, KROO, SIL, SKOR-OLD
by: Carl T. Delfeld

The IQ South Korean small cap ETF (NASDAQ:SKOR-OLD) hit the market this week. The SKOR basket contains about 100 stocks, weighted by market cap with a maximum weighting of 10% and quarterly rebalancing. Included companies need to have a market cap of $150 million plus average daily trading volume of 1 million. Pretty small stuff - high upside and downside. SKOR’s top five holdings account for about 14% of fund right now.

IndexIQ is in the process of launching 13 country-specific small-cap ETFs targeting Asian economies and some commodities ETFs. Here are the other two currently trading: IQ Australia Small Cap ETF (NYSEARCA:KROO), IQ Canada Small Cap ETF (NYSEARCA:CNDA).

Global X Funds, the New York-based ETF family, launched this week the Global X Silver Miners ETF (NYSEARCA:SIL) and the Global X Copper Miners ETF (NYSEARCA:COPX).

SIL is the only ETF in the world targeting silver mining companies. It tracks the Solactive Global Silver Miners Index, comprised of the largest and most liquid silver mining companies in the world. The majority of holdings are Canadian based companies but also include companies based in the US, Mexico, Peru, and Russia.

As of March 31, 2010, the largest index components were Fresnillo, Industrias Penoles, Silver Wheaton, and Pan American Silver. Silver benefits from being an investment asset and from industrial and consumer applications.

Because SIL invests in silver mining companies, it provides a different investment profile to investing in physical silver.

The companies in the copper COPX basket are based in Canada, Australia, UK, US, Mexico, China, Poland, Switzerland, and South Africa. As of March 31, 2010, the largest index components were Freeport-McMoran, Xstrata, Grupo Mexico, and Southern Copper. COPX is to a great degree a play on global infrastructure and governments are expected to spend approximately $30 trillion on infrastructure projects over the next 20 years, according to a 2009 study by CIBC World Markets.

China is currently the world's largest consumer of copper and is projected to use 15.6 billion pounds of copper each year by 2015, according to Barclays Equity Research.

SIL and COPX have a 0.65% expense ratio.