Van Eck says ETFs can reflect changes in industry sectors, whereas HOLDRS’ depositary trust structure is static.
Van Eck Global has filed with the Securities and Exchange Commission to convert six Merrill Lynch HOLDRS to its line of Market Vectors exchange-traded funds.
Van Eck expects the transition to take place in the fourth quarter and says ETFs better reflect changes in industry sectors, since they rebalance their holdings periodically, whereas HOLDRS, structured as depositary trusts, remain static.
The six Merrill Lynch-sponsored HOLDRS invest in oil services, semiconductors, pharmaceuticals, biotech, retail and regional banks. Van Eck said that the underlying indexes for the new Market Vector ETFs seek to find the most liquid stocks in each of those industries. Van Eck will review each of the indexes twice a year and apply weighting caps each quarter.