Market Overview

Checking In: A Look At A New ETF


A new weekly feature that we're proud to unveil is "Checking In," an column devoted to a look at a new ETF. To qualify as "new," the ETF being highlighted must be under one-year old. There are no other requirements and no preference is given based on assets, issuer or related items.

Since ETF issuers have shown no signs of slowing down in terms of new product introductions, we expect to be busy with Checking In for the rest of 2011 as we look to uncover the very best opportunities with rookie ETFs.

To start, we'll go with an ETF that truly is new: The Global X Aluminum ETF (NYSE: ALUM). ALUM is first-to-market in terms of providing investors with an ETF devoted entirely to the aluminum sector. The fund made its debut on Jan. 5 and in that time has gained 2%, only half what the S&P 500 has returned in the same time.

At six weeks old, it would be fair to calll ALUM's asset haul decent with almost $3.9 million AUM. Not bad, but we've seen better. We've also seen worse. Volume is also fair at nearly 21,000 shares a day.

Three reasons to like ALUM:
1) Aluminum prices should move higher as the global economic recovery gathers steam.
2) The outside chance of Rio Tinto (NYSE: RIO) buying Alcoa (NYSE: AA). Those are ALUM's top-two holdings.
3) An ETF or ETFs backed by physical aluminum could make their debuts soon, providing a boost for ALUM.

Bottom line: Assuming the economy cooperates, aluminum prices should firm up this year, and that would work in ALUM's favor in terms of boosting volume and AUM. Both factors along with overall retuns should look a lot better for ALUM when we take another look at the fund at the end of the year.

Posted-In: Long Ideas News Sector ETFs Short Ideas Intraday Update Trading Ideas ETFs


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