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Despite Huge Price Growth, The Steel ETF (SLX) Isn’t Attracting Much Interest
One cannot mention the Coal industry without talking about Steel, since coal itself is an integral part of the iron and steel making process.
Yesterday, we focused on the coal industry as it pertains to ETFs, specifically KOL (VanEck Vectors Coal, Expense Ratio 0.59%), and the sector itself has been in the headlines in the past twenty-four hours because President Trump signed a bill that effectively undid a a piece of Obama administration coal mining legislation.
As we mentioned yesterday, Coal stocks have rallied nicely since their dreadful lows back in September of last year and Steel stocks have fared even better during this time frame. SLX (VanEck Vectors Steel, Expense Ratio 0.55%, $113 million in AUM), also from ETF issuer VanEck, is the only way to play the segment from an ETF perspective, with the fund having launched back in 2006.
SLX has had relatively flat asset flows year-to-date in spite of rallying nearly 40% in the trailing six-month period. SLX trading volume has been relatively light lately as well, with one-month trailing average volume of about 82,000 shares, versus a three-month trailing figure of about 128,000 shares. There are twenty-six individual equity holdings within SLX and only about half of the portfolio is invested in U.S. based companies.
With a 49% allocation to the U.S, Brazil is the second largest country weighting in the product at 25%, followed by lesser weightings to United Kingdom (15%), South Korea (5%), and India (5%). There is also a reasonable spread across different market-cap sizes that are represented in the portfolio with a 35% slice dedicated to Mega-Caps, 28% to Large-Caps, 21% to Mid-Caps, 14% to SmallCaps, and finally 2% allocated to Microcap stocks.
The top two holdings in the product make up nearly 30% of the overall portfolio, and look as follows: 1) RIO (15.11%), 2) VALE (14.73%). Other top holdings are 3) MT (6.59%), 4) TS (5.71%), 5) PKX (5.57%), 6) SID (5.37%), 7) GGB (5.13%), 8) NUE (5.10%), 9) VEDL (4.79%), and 10) RS (4.10%).
Steel falls within the greater “Materials” space, of course represented by the $3.7 billion XLB (SPDR Materials Select Sector, Expense Ratio 0.15%), so at only $113 million presently, SLX likely has nice potential for asset growth — especially if the strength in the underlying sector continues.
The Market Vectors Steel ETF (NYSE:SLX) was trading at $44.19 per share on Friday afternoon, down $0.29 (-0.65%). Year-to-date, SLX has gained 16.94%, versus a 4.82% rise in the benchmark S&P 500 index during the same period.
SLX currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #24 of 121 ETFs in the Commodity ETFs category.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
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