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By Market News Video Staff, Tuesday, March 15, 3:24 PM ET
Global X Funds, the New York based provider of exchange traded funds, recently launched two new funds: the Global X Pure Gold Miners ETF (AMEX:GGGG) and the Global X Oil Equities ETF (XOIL). The launches are the latest expansion in the ETF issuer’s global commodity funds suite and are aimed at giving investors a purer play in gold and oil equities, respectively, by following the indexing methodology of the Solactive Indexes.
The goal of the Global X Pure Gold Miners ETF is to provide investors with relatively easy access to companies that get the vast majority of their revenues from gold mining. Unlike other indexes such as the NYSE Arca Gold Mining Index, which actually includes several silver miners, over 95% of the revenues from the companies in the Solactive Index are derived from gold mining. The Global X Pure Gold Miners ETF is a global fund, providing access to gold mining companies listed on exchanges all over the world. According to Global X, the Fund’s largest components as of March 10, 2011 were Gold Fields Ltd. (NYSE:GFI), OJSC Polyus Gold (OPYGY) and Kinross Gold Corp. (NYSE:KGC).
“Not all gold miner ETFs are created equal and Global X Funds is the first to provide one which is a pure play on gold miners,” said Bruno del Ama, chief executive officer of Global X Funds.
The Global X Oil Equities ETF is unlike other oil funds. While many indexes have been developed to track the market price of oil – using oil futures or oil equities, for example – few have been able to accurately track the performance of oil. In order to address this issue, the Global X Oil Equities ETF was developed as a Fund that only includes companies with the highest correlation to oil prices. By using this correlation criterion, the Fund provides exposure to pure-play oil companies with significant oil reserves that are not as involved in other industries such as natural gas or downstream operations. According to Mr. Del Ama, the Fund offers investors exposure to oil while avoiding other issues that may reduce returns. As of March 10, 2011, the three largest components of the index were Forest Oil Corp. (NYSE:FST), Newfield Exploration Co. (NYSE:NFX), and Apache Corp (NYSE:APA).
Although oil has been on the rise recently due to speculation of supply disruptions in the Middle East, its streak appears to be curbed by concern that damage from Japan’s disaster will hurt crude demand. According to BP plc (NYSE:BP), Japan was responsible for 5.2 percent of global oil demand in 2009. This is not good news for the oil industry, however many analysts believe oil will only suffer in the near term. According to David Fyfe head of the International Energy Agency’s oil industry and markets unit in Paris, “Initially, because of the curtailment of industrial activity, we may well see lower oil demand in Japan.” But Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis suggested: “The move lower is probably overdone. Once the rebuilding gets under way there will be a big increase in demand for commodities.”
The ETF Channel Flexible Growth Investment Portfolio is designed to seek growth for investors — anywhere and everywhere. The key to the program is our portfolio strategy allows us complete flexibility in terms of asset allocation as there are no predetermined guidelines as to the level of stocks, bonds, cash, regions, countries, sectors, commodities, or even asset classes in the portfolio! In short, this is a completely flexible portfolio designed to follow the performance trail wherever it leads us.
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