Knowing who’s in and who’s out at major sharemarket indices is big business for investors – and bankers – as passive funds boom.
Street Talk understands VanEck’s Australian office spent last week battling misinformation about potential changes to its gold miners exchange-traded fund which was spreading through its client base.
One of the world’s largest gold miners ETFs is undergoing a major index shift. JOE ARMAO
VanEck is an ETF provider that was started in the United States but opened an Australian branch in 2013 run by Arian Neiron. Both the US and Australian branch run identical but separate gold miners ETFs, tracking the world’s largest gold mining companies like Newmont, Northern Star and Evolution Mining.
Two weeks ago, VanEck US announced that it would be migrating the underlying benchmark for its NYSE-listed product (GDX) from NYSE Arca to its subsidiary Market Vectors on September 19, sending ripples through the gold market. This will see 22 names removed from the $US15.5 billion ETF and seven names added as the fund goes from 57 constituents to 42.
The NYSE product, one of the world’s oldest and largest gold miners ETF, is important to traders and bankers alike, keeping smaller miners on watch for when they start to hit the threshold for index inclusion. This is particularly important to the Australian resources sector, given its outsized role.
Street Talk understands GDX has popped up in banker’s pitch books for St Barabara-Genesis and Ramelius-Spartan as gold price fever sends multi-billion bids flying.
It will also impact the 10 ASX-listed gold miners that will lose passive support: Genesis Minerals, Capricorn Metals, Regis Resources, Gold Road, Ramelius Resources, West African Resources, Emerald Resources, Vault Minerals, Resolute Mining and Bellevue Gold. On the flip side, Westgold Resources, Northern Star Resources and Perseus Mining will see their weight increase in the MarketVector Gold Index.
One broker estimates the index change will result in around $US3 billion buying and $US3 billion selling across the 29 impacted names in a note seen by Street Talk.
Gold blocks While VanEck’s US product is changing its index, Street Talk has confirmed the local ASX-listed fund – VanEck Gold Miners AUD ETF – has not introduced changes to its index, despite many of the provider’s clients believing it will. While they bear the same name, the $800 million ASX-listed fund is a completely separate entity and has elected to stick with the NYSE Arca Gold Miners Index (AUD).
Complicating matters was $500 million worth of trades going through pre-market on Thursday morning more than 15 ASX gold names. Fingers were pointing at an investor positioning ahead of the GDX shake-up and the September 19 deadline. However, others disagreed, saying it was too early to be pre-empting the change. They noted this week’s rebalancing for the VanEck Junior Gold Miners ETF, which contains a number of ASX-listed stocks that traded on Thursday.
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