Van Eck Launches New ETFs To Replace Six Delisted HOLDRS

December 31, 2011 by  
Filed under Commentary, ETF IPOs (New ETFs)

Van Eck Global rolled out six Market Vector ETFs on December 21, 2011 that began trading as newly-listed issues on NYSE Arca.  The new ETFs will use the same ticker symbols as six similar Merrill Lynch HOLDRS products that were delisted the prior day.  About two-thirds of the outstanding HOLDRS shares were tendered to Van Eck and automatically exchanged into shares of the new Market Vector ETFs.

The new funds are Market Vectors Bank and Brokerage ETF (RKH), Market Vectors Biotech ETF (BBH), Market Vectors Oil Services ETF (OIH), Market Vectors Pharmaceutical ETF (PPH), Market Vectors Retail ETF (RTH), and Market Vectors Semiconductor ETF (SMH).

The underlying indexes are designed to provide liquid and diversified exposure to each particular industry.  As is typical of indexes, each is dynamic and will evolve over time to reflect changes to the industry it represents.  Common traits of the new ETFs include:

  • Track one of the various Market Vectors US Listed 25 Indexes
  • Hold 25 of the largest US listed stocks in the sector or industry
  • Use a market capitalization weighting methodology
  • Have expense ratios capped at 0.35%
  • Rebalance quarterly to reflect index changes

Market Vectors Bank and Brokerage ETF (RKH) is truly global in nature, with just a 36% allocation to U.S. based banks.  Other country representation includes Canada 17%, U.K. 11%, Brazil 9%, Spain 8%, Switzerland 6%, and Japan 5%.  The five largest holdings are Wells Fargo & Co (WFC) 10.5%, HSBC Holdings ADR (HBC) 9.9%, JPMorgan Chase (JPM) 9.4%, Royal Bank of Canada (RY) 5.4%, and Toronto-Dominion Bank (TD) 5.3%.  RKH overview and RKH fact sheet (pdf).

Market Vectors Biotech ETF (BBH) is one of seven (five traditional and two geared) ETFs focused on biotechnology.  The five largest holdings are Amgen (AMGN) 18.2%, Celgene (CELG) 9.6%, Gilead Sciences (GILD) 9.6%, Biogen Idec (BIIB) 8.2%, and Alexion Pharmaceuticals (ALXN) 4.8%.  BBH overview and BBH fact sheet (pdf).

Market Vectors Oil Services ETF (OIH) has a good chance of retaining the role of its HOLDRS predecessor – being the most popular energy services industry ETF.  The five largest holdings are Schlumberger (SLB) 19.2%, Halliburton (HAL) 10.0%, National Oilwell Varco (NOV) 9.1%, Baker Hughes (BHI) 6.7%, and FMC Technologies (FTI) 4.8%.  OIH overview and OIH fact sheet (pdf).

Market Vectors Pharmaceutical ETF (PPH) is one of five pharmaceutical ETPs.  The five largest holdings are Johnson & Johnson (JNJ) 7.5%, Pfizer (PFE) 7.0%, Novartis (NVS) 5.7%, Merck & Co. (MRK) 5.2%, and Bristol-Myers Qsuibb (BMY) 5.1%.  PPH overview and PPH fact sheet (pdf).

Market Vectors Retail ETF (RTH) will likely trail far behind the current retailing ETF popularity leader – SPDR S&P Retail (XRT).  The five largest holdings are Wal-Mart Stores (WMT) 11.1%, Home Depot (HD) 6.9%, Amazon.com (AMZN) 6.7%, CVS Caremark (CVS) 5.8%, and Lowe’s Co (LOW) 5.1%.  RTH overview and RTH fact sheet (pdf).

Market Vectors Semiconductor ETF (SMH) also has a good shot at retaining the role of its HOLDRS predecessor – being the most popular semiconductor industry ETF.  The five largest holdings are Intel (INTC) 19.6%, Taiwan Semiconductor ADR (TSM), Texas Instruments (TXN) 7.1%, ASML Holding (ASML) 5.1%, and Broadcom Class A (BRCM) 4.9%.  SMH overview and SMH fact sheet (pdf).

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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