ETF Showdown: Sibling Rivalry
It's no secret that iShares, the world's largest ETF issuer, has been issuing new funds at warp speed this year. And it's no secret that some of those funds look a lot like other ETFs that have been around a while.
What is interesting about some of the recently introduced iShares ETFs isn't so much that they compete with currently existing products from rival issuers. It is that some of the new iShares funds look a lot like older iShares ETFs.
Take the example of the iShares MSCI Global Select Metals & Mining Producers Fund (NYSE: PICK). Great ticker, but on the surface, this ETF looks like a kissing cousin to the iShares S&P Global Materials ETF (NYSE: MXI). Despite a lack of frequent press, MXI will turn six this year and is currently home to $554.6 million in assets under management.
Here are MXI's top-10 holdings: Two versions of BHP Billiton (NYSE: BHP) shares, Rio Tinto (NYSE: RIO), BASF, Anglo American, Vale (NYSE: VALE), Barrick Gold (NYSE: ABX), DuPont (NYSE: DD), Freeport McMoRan (NYSE: FCX) and Monsanto (NYSE: MON).
Accounting for two versions each of BHP, Rio Tinto and Vale, Anglo American and Freeport, PICK has eight of the same top-10 holdings MXI thought the allocations differ. With that, it's easy to see why some might assume these funds are eerily similar to each other.
But hold on. There are big differences. For example, MXI has an expense ratio of 0.48% and his home to 126 stocks. Those numbers change dramatically with PICK, which charges 0.39% and is home to almost 310 stocks.
MXI offers exposure to non-mining materials plays such as fertilizer and chemicals producers and is heavier on precious metals miners. In fact, chemicals producers, fertilizer firms included, account for a third of MXI's weight. On the other hand, PICK is 100% miners, aluminum companies, steel producers and related fare.
Both funds are decidedly international in their country allocations, but there's a big difference here as well. Almost 24% of MXI's weight lies with U.S. companies, but that number drops to just over 11% with PICK's lineup. Overall, MXI offers exposure to approximately 25 countries. That number jumps to over 35 with PICK.
Given PICK's small data set (the ETF's inception date is January 31), it's not yet relevant to compare the performance of these two ETFs. However, we do want to PICK a winner, pun intended. We'll admit there have been times when we liked MXI but on the basis of more stocks, more countries and lower fees, we're going to side with the newly minted PICK in this week's ETF Showdown.
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