Enter the Steel Industry with These Steel ETFs
List of Steel ETFs
I’m a big fan of sector ETFs. They give you the ability to gain exposure to an industry without having to corner the market on every company’s stock that trades in that sector. So for example, if you wanted to invest in the steel industry, you could buy a steel ETF instead of making multiple trades collecting shares of steel companies in your portfolio.
Now, you could target a steel index, but even then, you still have to manage trading multiple stocks in order to fill your basket and get the targeted index price. And in both situations, index or individual stocks, you still have to pay commissions and fees on the multiple trades. That can add up rather quickly.
So for those reasons, I am a proponent of buying a steel ETF (if that is your target sector). With one trade, you get instant exposure to the industry and you save on commissions.
There are downsides to this strategy, you are limited to the companies in the fund and if there is a lack of trading volume, there is the chance the ETF could close down. However, you would still get your market value. But the other downside is that there are not many options for steel ETFs. In fact, currently, there are only two. Update February 25th, 2016: PSTL has been delisted, so the only actively traded steel ETF on the market is SLX
However, I am still a fan if you want exposure to this industry and not to mention the many advantages that come with ETFs, especially the tax benefits.
So if you agree and want to use a steel ETF to diversify your portfolio, hedge certain risk, or just target an opportunity in the steel industry, then you are going to want to research these two steel ETFs.
SLX - Market Vectors Steel ETF
This steel ETF from Van Eck Global also tracks the NASDAQ OMX Global Steel Index. Some of its top holdings include Rio Tinto, US Steel Corporation, Vale, and Posco. It has been around since October of 2006 and also has listed options (calls and puts).
So, unfortunately, there are not a lot of steel ETFs currently available. In the meantime, if you feel these funds are a potential fit for your portfolio, make sure you research them thoroughly. Consult your broker or a financial professional if you have any questions or concerns and be aware of any risks associated with the funds or ETF trading in general. And most of all, good luck.
And if you're interested in other metal ETFs, this list might be helpful.
List of Base and Industrial Metals ETFs and ETNs
- BDD - Power Shares DB Base Metals Double Long ETN
- BDG - Power Shares DB Base Metals Long ETN
- BOM - Power Shares DB Base Metals Double Short ETN
- BOS - Power Shares DB Base Metals Short ETN
- DBB - Power Shares DB Base Metals ETF
- GRWN - iPath Pure Beta Softs ETN
- HEVY - iPath Pure Beta Industrial Metals ETN
- JJM - iPath DJ UBS Industrial Metals Total Return Sub Index ETN
- PICK - iShares MSCI Global Select Metals & Mining Producers Fund
- PSTL - Power Shares Global Steel ETF
- REMX - Market Vectors Rare Earth Strategic Metals ETF
- RJZ - ELEMENTS Rogers International Commodity Metal ETN
- SLX - Market Vectors Steel ETF
- UBG - UBS E TRACS CMCI Industrial Metals Total Return ETN
- UBM - UBS E TRACS CMCI Industrial Metals Total Return ETN
- XME - SPDR S&P Metals & Mining ETF
Disclaimer – At the time of publication for this article, I do not have any open positions in PSTL, SLX, or any of the equities included in the funds.