Where Does Your Mining ETF Dig?

Exchange-traded funds offering exposure to Commodity Producers Equities have become a popular tool for those looking to make an indirect play on natural resource prices. These funds offer investors the ability to easily tap into the lucrative commodities market through a diversified basket of companies, while still reaping the cost-efficiency benefits associated with the exchange-traded product structure. Investors who wish to access the mining sector, for example, have a number of options available at their fingertips [Download Free Report: How To Buy The Right ETF Every Time].

The broad-based mining ETFs are a great hold for investors looking to spread their risk among a number of industrial and precious metal mining operations. Besides metal exposure, these firms are in operation all over the world and can offer an interesting play into the global market, depending on where your broad mining ETF is located [be sure to also check out the Futures Free Commodity ETFdb Portfolio].

Broad Commodity Operations

These ETFs come with a number of volatility risks that are specific to commodity manufacturing; primarily, the role that the countries in which these operations are located can play in returns. While a majority of refining plants are held in stable and developed nations like the United States and Great Britain, the exploration and mining of metals can take firms around the globe. Growing in popularity are operations in emerging economies like China, Brazil and South Africa, which offer higher potential returns, but also a riskier environment [see 10 Questions About ETFs You've Been Too Afraid To Ask].

The chart below highlights the markets with the heaviest concentration of mining companies, based on the holdings of four broad-based mining ETFs:

• MSCI Global Select Metals & Mining Producers Fund (PICK, B)
• EGShares Emerging Markets Metals & Minings ETF (EMT, C+)
• Global X Junior Miners ETF (JUNR, n/a)
• PureFunds ISE Diamond/Gemstone ETF (GEMS, n/a)

  
    google.load('visualization', '1', {packages: ['geochart']});

    function drawVisualization() {
      var data = google.visualization.arrayToDataTable([
        ['Country', 'Percent of Broad Mining Operations (%)'],
        ['United States', 15.3],
        ['United Kingdom', 12.44],
        ['Australia', 14.94],
        ['Brazil', 7.13],
        ['Japan', 3.43],
        ['Canada', 15.34],
        ['South Korea', 1.58],
        ['Switzerland', 1.20],
        ['South Africa', 6.29],
        ['Mexico', 2.76],
        ['Hong Kong', 7],
        ['Ireland', 0.38],
        ['China', 5.43],
        ['India', 2.85],
        ['Russia', 2.75],
        ['Poland', 1.23],
        ['Chile', 0.55],
        ['Turkey', 0.5]
      ]);
    
      var geochart = new google.visualization.GeoChart(
          document.getElementById('visualization77811'));
      geochart.draw(data, {width: 556, height: 347});
    }
    

    google.setOnLoadCallback(drawVisualization);
  

Investors should always look into the locations of their commodity operations, as the geopolitical structure in each country could play a powerful role in the firm’s returns.

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Disclosure: No positions at time of writing.

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