PureFunds brand set to debut in fourth quarter with flagship diamond and gemstone ETF

Sep 26th, 2012 | By | Category: Equities

FactorShares has filed with the US Securities and Exchange Commission to launch three new exchange-traded funds (ETFs) under the soon-to-be-launched PureFunds brand.

PureFunds brand set to debut in fourth quarter with flagship diamond and gemstone ETF

The planned PureFunds ISE Diamond/Gemstone ETF (GEMS) should appeal to investors looking for hard assets as a potential safe haven from the degradation of fiat currencies.

The new funds will include a specialist diamond and gemstone ETF, the first ever to hold shares of companies exclusively engaged in the precious stones industry.

The funds are expected to launch in the fourth quarter of this year.

Commenting on what is likely to become the brand’s flagship product, Paul Zimnisky, co-founder and CEO of PureFunds, said: “The PureFunds ISE Diamond/Gemstone ETF aims to track the supply/demand cycles of the rough and polished precious stone industry.”

Zimnisky added: “The demand for diamonds and other gemstones has substantially increased over the past years as global investors look for hard assets as a potential safe haven from the degradation of fiat currency.”

The funds filed for are:

PureFunds ISE Diamond/Gemstone ETF (GEMS)
PureFunds ISE Mining Service ETF (MSXX)
PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (SILJ)

The PureFunds ISE Diamond/Gemstone ETF will track the ISE Gemstone Index. This index is designed to reflect the performance of companies involved in the gemstone industry, including companies that produce, explore, and sell gemstones. The index is generally comprised of 20-30 securities and was created and is maintained by ISE Indexes. As of July 24, 2012, the index had 26 constituents, of which 23 were non-US; major holdings included Petra Diamonds, Harry Winston Diamond Corporation and Chow Tai Fook Jewellery Group.

The PureFunds ISE Mining Service ETF will track the ISE Mining Services Index. This index is designed to reflect the performance of companies that manufacture, lease, sell and provide equipment, consulting or other services to the mining and mineral exploration and extraction industry.  The index is generally comprised of 30-40 securities and was created and is maintained by ISE Indexes. As of July 24, 2012, the index had 31 constituents, 28 of which were based outside of the US; major holdings included Mineral Resources, China Coal Energy Company and Joy Global.

PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF will track the ISE Junior Silver Index. This index is designed to reflect the performance of small-capitalisation companies involved in the silver industry, including companies that mine, explore and refine silver. The index is generally comprised of 20-30 securities and was created and is maintained by ISE Indexes. As of July 24, 2012, the index had 28 constituents, 23 of which were non-US; major holdings included Endeavour Silver Corp., Fortuna Silver Mines. and McEwen Mining.

Zimnisky said the “mining service and silver explorer funds were also designed to leverage the increasing demand for hard assets like gold and silver.”

The three funds have been filed to trade on the NYSE Arca (anticipated for Q4) and will come with an annual expense ratio of 0.69%.

PureFunds is not alone in anticipating demand for a diamond-based ETF product. IndexIQ, a leader in smart beta ETFs,  recently filed paperwork with the SEC to market the IQ Physical Diamond Shares, a physically-backed commodities ETF holding diamonds, while GemShares, a Chicago-based financial firm, is hoping to secure a US patent for its process of turning physical diamonds into tradable ETF securities.

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