Hard Assets ETF Also Faces Competition

According to the filing, the Hard Assets fund will invest in "securities that derive their revenues from the mining, processing and sale of hard commodities." Those will include precious metals, base metals, energy and energy services.

The mix will be what's interesting. Delta Global will use a combination of fundamental and technical analysis in its selection processes for its ETFs. It's described as a top-down approach, focusing on commodity sectors and global markets. The fund will invest in companies with market caps of $400 million or more, making it a more all-caps-styled approach. 

Commodities included in the portfolio are expected to be: gold, silver, platinum, copper, nickel, zinc, oil, natural gas, coal and uranium. But the filing makes it clear that more can be added at the manager's discretion. Stocks representing those types of commodities will be selected within three general categories: industrials, materials and energy.

With that sort of a broad base of companies, the new ETF might offer some competition to the Van Eck Market Vectors Hard Assets Producers ETF (NYSE Arca: HAP). That's the most diversified ETF hollding commodity-producing equities on the market today.

HAP launched last September in an effort to reshape the natural resources investing landscape. It was billed as the first global pure-play hard assets ETF to hit the market. (See related story here.)

In a sense, the new fund will also challenge commodity futures ETFs and ETNs. In that vein, the most diversified competitor is the ELEMENTS Rogers Commodity Index ETN (NYSE Arca: RJI). It's based on an index by Jim Rogers.

However, the ETN ran into liquidity problems recently when its underlying issuer, the Swedish Export Credit Corp., had to restate earnings. It had to stop issuing new shares of the ETN, which left it acting more like a closed-end fund. (See related article here.)

(For a comprehensive review of commodity ETFs and ETNs, see related article from the Exchange-Traded Funds Report here.)

Global Agriculture In Real Time

Interestingly, this proposed ETF would take a bottom-up approach to picking stocks. The fund would "invest in securities that derive from the growing, selling, processing and/or trading of a broad spectrum of agricultural commodities, seeds and chemicals ..."

Commodities represented in the fund would include: corn, soybeans, wheat, sugar, palm oil, cotton, oats and fruit. It can also invest in companies involved in edible oils used as biofuels.

The most direct competitor to the new active ETF in this category could come from the Market Vectors Agribusiness ETF (NYSE Arca: MOO). It also invests in stocks rather than futures contracts, and the leading agribusiness ETF on teh market today. 

No expense ratios were listed for these new ETFs in the filing. But for other details included, you can find the full document here.

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