Madison, N.J.-based PureFunds came up with the concepts for three funds and their underlying indexes focused on gemstone production, the mining service industry and the silver exploration industry. ISE developed the indexes, and also provided financial, marketing and business development support for the PureFunds Diamond/Gemstone ETF (GEMS), PureFunds ISE Mining Service ETF (MSXX) and PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (SILJ) offerings.
All three funds were launched in late November, and all of them sport an expense ratio of 69 basis points. GEMS tracks the ISE Gemstone Index composed of international companies engaged in gemstone production or sales. MSXX tracks the ISE Mining Service Index comprised of companies that make and sell mining equipment, provide consulting and other services to miners, and well as miners themselves. SILJ tracks the ISE Junior Silver Index made up of small-cap silver mining and exploration companies.
The funds haven’t drawn much attention during their brief four-month existence, but Zimnisky says it’s a matter of getting the word out. “We knew it would be challenging bringing new products to market,” Zimnisky says. “These are unique funds, so there’s a need to educate people about how the companies and their industries make money.
“I view them as tactical products because they’re very specific in scope,” he continues. “We think our products could appeal to hard asset investors who want to diversify their physical gold or gold equities holdings.”
From a performance perspective, the PureFund’s mining services ETF has been the star of the group with a 13 percent gain since inception.
Big Plans
In February, ISE and fund provider IndexIQ announced they’ve teamed up to develop and launch funds focused on physical commodities. IndexIQ’s forte are index-based funds with strategies geared toward international, commodity and alternative investment-oriented strategies.
Monaco says ISE is keen on equity-based commodity exposure and on actual physical commodities. “I think there’s demand for physical commodities that can be securitized in a way that provides transparent pricing of shares in a listed product,” he notes.
Monaco adds that ISE wants to expand its ETF game beyond commodities-linked products. “We’re looking for anything that pushes the envelope in terms of how far ’40 Act products in a wrapper have gone so far,” he says. “We’re looking at options-based ideas that can be packaged into an ETF.”