The fund tracks an index that isolates the metals and mining industries within the S&P Total Market Index. It holds sub-industries such as aluminum, coal, copper, diversified metals and mining, gold, precious metals, silver and steel, giving broad exposure to commodity-producing companies.

It suits investors who want to bet on an inflationary phase or a rising commodity cycle, and those who would rather diversify across the whole industry than hold one or two large mining stocks.

It is a passively managed (index-tracking) ETF run by State Street.

The fund holds stocks from the metals and mining sub-industries on a modified equal-weighted basis, designed so that no single mega-cap mining company dominates. As a result, the moves of small and mid-cap steel, copper and gold mining stocks feed directly into performance, and weights are reset evenly through the quarterly rebalance.

• Modified equal-weighted structure rather than market-cap weighting
• Covers sub-industries including steel, copper, gold, silver and coal in one product
• Relatively large exposure to small and mid-cap mining stocks

Assets under management (AUM) stand at $3.6B, and the expense ratio is 0.35% per year.

Because its industry scope is narrower than broad materials sector ETFs and it is equal-weighted, volatility tends to be higher. In return, it reacts quickly when commodity prices rise.

Performance swings widely with metal prices and steel spreads. During commodity rallies it has run ahead of the broader materials sector, and when demand weakens its drawdowns have also deepened, a pattern that has repeated.

Money tends to flow in when inflation worries or infrastructure spending expectations build, and leaves quickly when signs of an economic slowdown appear, giving it a strongly tactical character. It is more often used as a tool for trading the cycle than as a long-term core holding.

Its strength is even exposure across the metals and mining industries, while industry concentration and dependence on commodity prices are the burdens.

The XLB, VAW, FMAT and others shown in the table are broad materials sector products that also include chemicals, so they tend to have larger assets and lighter fees, while IYM ETF and FXZ ETF carry relatively higher fees. If you want to pick only metals and mining, it is also worth comparing PICK, which holds global mining stocks, GDX, which focuses on gold miners, COPX for copper miners, SIL for silver miners and SLX, which concentrates on steel.

Here are the items to review before investing. Given that a sector ETF concentrates on a single industry, it is best to decide first where the commodity cycle stands at your entry point, the cost structure and your holding period.

Because the product is concentrated in a single industry, drawdowns are large during economic slowdowns or weakening metals demand. You should also keep in mind that, owing to the weighting in small and mid-cap mining stocks, it swings more than the market average in down markets.

It is a fitting tool for investors who want to bet directly on the metals and mining cycle. If you want broad exposure to the materials sector as a whole, consider XLB ETF or VAW ETF, and if you want to focus on the metals industry, consider this ETF.