The Large cap mining companies depends on the small cap industries for their survival, as these small cap mining industries support additional supplies of nickel, gold, silver, coal, titanium, and other commodities. Unions are formed with the small cap mining companies with the prospects of good supply of the additional resources, as these companies are involved in exploring, developing and monetizing new mines. It is highly profitable to invest in these companies because they have a much higher risk- reward ratio, as compared to the big fishes in the same sea. This fund gives a total exposure to the diverse investments available globally and most importantly to the numerous mining fields belonging to the asset basket of this portfolio. To make a clear picture the fund diversifies its investment into 100 junior mining companies.
This sector holds large activities in the fields of merger and acquisition (M&A). This helps the larger companies to hold a better geographical exposure along with the possibilities to grab good offers from new and profit binding exportations held by the junior mining sector.
Of recently the fall in the Gold bullion has had very negative effect in the market for the mining sector. Because the revenues and earnings of the junior sector investments rely more on the prices of gold and precious metals. The sudden slump in the prices of gold has shown their impact on the fund. There could be a move towards a slow trend in the financing of this sector till the increase in the Gold bullion markets.
Shougang Fushan Resources Group Limited holds the top most asset of the Fund and this company is associated and integrated for coking coal in central-western China. This company engages itself in the production and sales of raw and clean coking coal owning and operating three coking coal mines in the People's Republic of China.
The second top holder of the junior miners ETF is a gold mining company which engages itself in the mining and exploration and extraction of the precious metals in two major countries- Mexico and Turkey. It is mostly associated with the yellow colored precious metal-Gold. Founded in 1994, Alamos Gold Inc has its headquarters in Toronto, Canada.
The third highest asset holder is B2Gold Corp, which is a Vancouver based gold producer. It owns and operates three mines situated in Nicaragua and Philippines. The diversification of these holdings is clearly stated by the fund, and it emphasizes on the geological diversity.
The other indirect exposures offered by the fund are towards: Stillwater Mining Co., Aurico Gold Inc., Northam Platinum Ltd., Ferrexpo Plc, Coeur Mining Inc., Alpha Natural Resources Inc. and many other small allocations.
The countries that hold the greatest share and weight age of the junior mining sector are Canada with a 36.25% share of the holdings followed by United States at 21.53%. Interestingly Australia follows on with 19.32% and China walking down with 4.88%.
Once there is a rise in the appetite for the precious metal, a rise in the prices should follow, giving a new lease of life to the small cap mining companies with a strong inflow of the foreign investments into the related fund. There would be an anticipated growth of the large cap companies as well as a later effect, pumping more funds in the exploration, extracting and mining of the precious metals and other commodities like titanium and coal.
Global X Junior Miners ETF [JUNR] yields as per the cumulative returns of the name sake Solactive benchmark. Delivering the true picture of the index and being a pure play to invest in junior mining companies, junior miners ETF operates at an expense ratio of 0.69%.