European basic resources sector ETFs making gains

Aug 2nd, 2017 | By | Category: Equities

Exchange-traded funds tracking the STOXX 600 Europe Basic Resources Index have recorded impressive returns recently with the index gaining over 10% in the month to 25 July 2017. The index is tracked by ETFs from Lyxor, iShares, Deutsche Asset Management, ComStage and Source.

European basic resources sector ETFs making gains

The index has been helped by recent rises in commodity prices, although high concentration makes the index relatively volatile.

The basic resources sector has been boosted recently by the rebound in commodity prices. The S&P GSCI Industrial Metals Index gained 5.4% in the month to 25 July as part of a sustained rise in commodity prices seen since mid-June.

The STOXX 600 Europe Basic Resources Index includes 20 equities in the basic resources sector from the STOXX 600 Europe parent index. The index is relatively concentrated, the largest components being Rio Tinto (21%), Glencore (16%) and BHP Billiton (15%), with the remaining components all carrying less than 7% weight each.

The largest country exposure is to the UK with a 28% weighting, followed by Switzerland (16%), Australia (14%) and Finland (10%). In terms of the sector breakdown, general mining is the dominant weight with 64% of the index, followed by paper (13%), iron & steel (12%) and gold mining (7%).

The largest ETF to track the index is the iShares STOXX Europe 600 basic Resources UCITS ETF (Xetra: EXV6), which was launched in 2002 and has assets under management of €435 million with a total expense ratio (TER) of 0.46%.

The cheapest ETF to track the index is the ComStage STOXX Europe 600 Basic Resources UCITS ETF (Xetra: C063), which was launched in 2008 and has AUM of €20m with a TER of 0.25%.

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