Tuesday, October 23, 2012

We’re going to take a closer look at two funds mentioned yesterday.  The Market Vectors Gold Miners Fund (GDX) picked up 5 positions today to rank one spot ahead of the SPDR S&P Metals and Mining Fund (XME) which fell 4 positions into 7th place.  Their overall scores are as close as can be at 73.8 and 73.7 where GDX gets a better Fundamental Score of 79.5 and XME gets the better Behavioral Score of 78.1.  Still very close as both have good scores in each 40% weighted category.  On the Diamond Ratings again we see little daylight between the two where GDX has a 4.95 Risk Rating and a 9.81 Reward Rating, both slightly higher than XME’s 4.91/9.58.  High Risk Ratings are negative, high Reward Ratings are positive so we’ll call this one a draw.  Looking at the ETFG Tear Sheets, the price charts show both funds rising up to meet a downtrend line so we could be at a pivotal point for each (expand the chart to 1 year for XME).  Thus far it looks like these funds could be held interchangeably.  Maybe if you are concerned about Canada you would want to stick with XME which is 98.5% US compared to GDX’s 50.2% Canadian exposure (we calculate this based on the corporate headquarters of each constituent).  It is not until you get to the exclusive ETFG Sub-Industry Exposure chart that you can see these are very different funds to be held for very different reasons.  If you think the world is going someplace bad in a hand basket and you want exposure to gold, then GDX ‘s 89.7% gold exposure and 10.3% exposure to precious metals & minerals is the fund for you.  XME does not fit that bill as its gold and precious metal exposure is only about 20% combined.  XME is a fund for those who see an accelerating world economy as its biggest sub industry exposure is 34% in steel and it has almost 20% in coal.  Don’t judge a book by its cover or a fund by its name.  Only ETF Global provides the granular detail and rigorous quantitative analysis that you need to make a sound investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.