Under The Hood: A Forgotten Materials ETF

We all know that emerging markets ETFs get a lot of attention and we all know that traders love materials stocks. So if you combined the best of both worlds, materials and emerging markets stocks, into one ETF, that ETF would be pretty popular, right? Maybe not. At least that's the case with the iShares MSCI Emerging Markets Materials Index Fund EMMT. So let's go under the hood with this ETF. First off, the big problem that EEMT has to deal with is light volume. In this case, "light" means almost non-existent at just over 1,600 shares a day. Second, the EMMT has collected barely over $6 million in assets since making its debut on January 20. If we're still talking about weak volume and low assets in a year, we may be writing EMMT's obituary. Third, the expense ratio is a tad high at 0.72%. OK, that's the bad news. The good news is that this 58-stock ETF will get you exposure to some of the top global materials names. Brazil's Vale VALE, the world's largest iron maker, and South Korean steel giant Posco PKX are found among EMMT's top-10 holdings. Chemical & Mining Co. of Chile SQM is another top holding and EMMT is one of the few ETFs that holds Peru's Buenaventura BVN. So give EMMT some credit, it is diversified across a good mix of countries and companies with exposure to different areas of the materials complex. In terms of performance, EMMT is even with the Materials Select Sector SPDR XLB and the iShares Global Materials ETF MXI. MXI has a big allocation to Vale as well, that ETF isn't focused exclusively on emerging markets whereas EMMT is. Given the weak volume and the problems that presents, just keep an eye on EMMT for now or only commit to a small position. The concept is sound with this ETF, but sometimes that's not enough. Beat the market consistently by receiving real-time trade alerts from the ETF Professor!