Some Metal/Mining ETFs To Consider

If you believe that the metals sector will continue to see outperformance in 2011, then having a portion of your portfolio in the sector is more than beneficial to your financial health. One of the bigger ETFs is SPDR S&P Metals and Mining ETF XME, which encompasses such stocks as Cliffs Natural Resources CLF, Massey Energy MEE. The SPDR S&P Metals and Mining charges 35 basis points, the lowest among similar ETFs. It uses its size and scale to compete on price. It has over $1.2 billion in assets. iShares Dow Jones US Basic Materials IYM is another ETF to consider, as it has such holdings as Freeport McMoran FCX, Newmont Mining Corporation NEM, Peabody Energy Corporation BTU and others. iShares Dow Jones US Basic Materials IYM has a small expense ratio, compared to the other ETFs in the sector. It only charges 47 basis points. The last ETF being mentioned in this article is the largest one, Materials Select Sector SPDR Fund XLB It's the largest ETF in the sector, with well over $2 billion under management. It holds such companies as largest holdings being Du Pont DD, Freeport-McMoRan Copper & Gold FCX, Dow Chemical DOW and others. The fund has an expense fee of 21 basis points. I would expect these ETFs to continue to rise over the next 6 months or so, as quantitative easing continues to weaken the dollar, and commodities and those companies associated with them, continue to rise. After 6 months is anybody's guess, because no one is sure what will happen with the Federal Reserve once QE2 is finished. You can also look at some individual metal ETFs, if you believe a particular metal will outperform. Palladium and platinum have performed extremely well since the Fed first announced QE2, and I would expect that the first part of 2011 will be no different. ETFs Physical Palladium Shares PALL and ETFS Physical Platinum Shares PPLT are ways to play these trends. Disclosure: no position in names mentioned