New base metals index on the TSX

Base metals investors now have a new index to follow through the S&P/TSX Global Base Metals Index, launched today by index provider Standard & Poor’s.

The index complements the S&P/TSX’s Global Mining and Global Gold indexes, says Jasmit Bhandal, S&P Canada’s director of business development.

“Our economy is so resource based it’s a good thing to have another way to break it down and follow it,” Bhandal says.

The index gives exposure to only base metals.

“It excludes gold and precious minerals as well as coal and consumable fuels,” Bhandal explains.

Stocks listed on the index are classified under two sub-industry groups: the diversified metals and mining group includes 23 companies while there are four companies listed under the aluminum group. Both are recognized under Global Industry Standard Classification Standards.

To be included in the index, companies must have a market capitalization of at least US$300 million. They also must be listed on the TSX, NYSE or NASDAQ.

Teck Resources (TCK.B-T, TCK-N), at No. 7 on the index, is the only Canadian company in the top 10.

Rio Tinto (RTP-N, RIO-L), Anglo American (AAUK-Q, AAL-L) and Freeport McMoRan Copper & Gold (FCX-N) are listed as the top three companies according to float adjusted market capitalization.

Bhandal says that the index was created as an investable index, meaning that the goal is for financial products to be created using the Global Base Metals Index as a benchmark.

“At this point there’s no product on it, it’s just been launched, but the goal is to have a product on it,” Bhandal says.

She says financial product providers such as banks use the S&P indices because the brand is strong and is known to use a very disciplined and regimented rules based approach to managing its indices.

Bhandal says S&P has had talks with several financial product providers, including Beta Pro.

“We already have interest so we expect product to be launched in the short term,” Bhandal says.