FactorShares, the ETF issuer known for its suite of spread products, has filed plans with the Securities and Exchange Commission (SEC) to possibly introduce an ETF that tracks companies engaged in the exploration, production and sale of diamonds. The fund could debut as early as the fourth quarter.
The PureFunds Diamond/Gemstone ETF will trade under the ticker "GEMS" on the New York Stock Exchange. FactorShares also filed plans for two other ETFs that will be licensed under the PureFunds brand, the PureFunds TM ISE Mining Service ETF (NYSE:MSXX) and the PureFundsTM ISE Junior Silver (Small Cap Miners/Explorers) ETF (NYSE:SILJ).
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All three ETFs will have expense ratios of 0.69 percent per year, according to the SEC filing.
As of July 24, 2012, GEMS' underlying Index had 26 constituents, 23 of which were foreign companies.Three of the six largest stocks were Petra Diamonds (NYSE:PDL), Harry Winston Diamond (NYSE:HWD) and Chow Tai Fook Jewellery Group (OTCBB: CJEWF)As of July 24, 2012, each of the six largest-weighted constituent securities in the Underlying Index represented 7.11% of the Index, according to the filing.
Some ETF issuers have filed for for funds backed by physical diamonds, but challenges remain for those products, including a lack of a futures market and opaque diamond pricing.
Earlier this year, GemShares filed a patent on its process of making diamonds tradable securities, which includes a building a basket of diamonds arranged in10 layers of comparable quality with the cheapest at the bottom and the priciest at the top, according to the Wall Street Journal.
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