$GDXJ rule change to allow greater flexibility - effective during the December quarterly rebalance ($SMF, $ASR)

The GDXJ, which represents close to 10% of the market cap of its constituents, announced yesterday some changes that will likely increase the number of companies included in the index. The changes will become effective on Dec 20th, 2014.

 

A rule change for the GDXJ gold ETF was announced today which will allow a greater number of companies in its underlying index.  This will be effective during the December quarterly rebalance.  

 

The change was likely made to address GDXJ's diversification issue and should be expected as this was one of the few solutions.  This will be impactful since GDXJ owns ~10% of existing constituents shares.  

 

Some possible implications:

New additions (such as Alacer ASR CN and others)

Reduction or deletion of Semafo SMF CN holdings (GDXJ still owns 25M shares even though it was deleted from index in September)

Reduction in existing names

Index Update Change to the Market Vectors Global Equity Index Guide Updated Selection Parameters for the MVGDXJ Index Frankfurt (13 October 2014) – Please note that the following change will be made to section 6.1.20 (Market Vectors Global Junior Gold Miners Index - MVGDXJ) of the Market Vectors Global Equity Index Guide, Version 3.09, September 2014: Current rule: «Companies covering the top 90.00% of the full market capitalisation are excluded. Only companies ranking between 90.00% and 98.00% qualify for the selection. However, existing components ranking between 80.00% and 90.00% or 98.00% and 100.00% also qualify for the selection.» New rule: «Companies covering the top 80.00% of the full market capitalisation are excluded. Only companies ranking between 80.00% and 98.00% qualify for the selection. However, existing components ranking between 75.00% and 80.00% or 98.00% and 100.00% also qualify for the selection.» The rule change will be adopted for the 4th quarter index review and will become effective with the implementation of the 4th quarterly review results on 20 December 2014. The Market Vectors Global Equity Index Guide, Version 3.10 can be downloaded here.

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