PICK: Diversified Industrial And Base Metals Producers For Commodities Exposure (PICK)

The iShares MSCI Global Metals & Mining Producers ETF (PICK) is a passively managed exchange-traded fund designed to track companies that participate in mining, extraction, or the production of industrial and base metals, excluding precious metals exposure. The strategy is regionally diversified and provides exposure across a number of different metals, including copper, iron & steel, and aluminum, amongst other materials. The strategy can be utilized by investors seeking diversified exposure to commodity producers and their respective cash flows in relation to the price of the commodities produced.

About iShares MSCI Global Metals & Mining Producers ETF

PICK was launched by iShares on January 31, 2012 on the Cboe BZX Exchange. PICK has a net expense ratio of 39bps, a relatively low cost strategy when compared to most peer ETFs.

PICK exhibits substantial depth, though thin liquidity with $1.9b in net assets and a 30-day average trading volume of 538k shares. As a result of the lower liquidity, PICK exhibits a relatively wide 30-day median bid/ask spread of 0.18%, potentially adding additional fees when actively traded.

PICK pays out a semiannual distribution at an annualized rate of $1.28/share over the last twelve months, yielding 2.04%. Distributions can vary widely from period to period, making this strategy most appropriate for capital appreciation rather than income.

PICK was designed to track the MSCI ACWI Select Metals & Mining ex Gold ex Silver Investable Market Index, which tracks the performance of companies that participate in industrial and the rare earth metals market. The Index consists of 234 constituents with exposure to small- through large-cap producers; the Index has a median constituent market capitalization of $1.21b with the largest constituent having a market capitalization of $175b. The Index is reviewed on a quarterly basis.

PICK currently invests across 244 holdings, which consist of equities as well as some exposure using futures derivatives. The ETF primarily invests in diversified metals & mining companies, making up 51% of the total portfolio weight, followed by steel at 25%, and copper at 14%. The strategy is regionally diversified with Australia accounting for 22% of regional exposure. Other regions include the UK at 16%, the US at 15.53%, and Canada at 7%.

The top 10 holdings within PICK account for 46% of the total portfolio’s assets. In contrast, the bottom 10 holdings account for roughly 0.12%. Top holdings within the ETF include BHP Group (BHP) at 12.30%, Rio Tinto PLC (RIO) at 6.80%, Freeport-McMoran (FCX) at 5.93%, and Glencore PLC (GLEN) at 4.55%.

BHP is an Australia-based diversified mining enterprise, primarily producing copper and iron ore at the global scale.

Freeport-McMoran is a US-based copper producer, operating globally in mining and refining.

Thematically, the metals & mining sector can be viewed through a variety of lenses. For copper, a major theme to consider is the increasing investments in power infrastructure and data centers, each requiring vast amounts of copper to operate. Iron exhibits broadly diversified themes, including automobile production, industrial manufacturing, power, and construction, amongst others. Sector demand can vary by region; the US may exhibit a larger focus in the automotive industry whereas China may exhibit more steel utilization in construction. Being mindful of macroeconomic trends like annual vehicle production, trucking, and construction starts may be useful indicators for assessing this component of the portfolio.

Some other factors investors may consider when investing in the strategy include international trade. For example, China has historically been a major counterparty to BHP’s iron ore mining operations. For example, Chinese imports accounted for roughly 63% of BHP’s sales in FY25. Trade disputes between the two countries could significantly impact operations and must be taken into consideration when evaluating PICK as an investment, particularly given the portfolio concentration in BHP.

Another factor to consider is trade tariffs. For example, Alcoa’s (AA) business has been impacted in the last year resulting from the 50% duty on imported aluminum and steel. Alcoa has historically imported aluminum into the US through Canada, resulting in mismatched economics throughout FY25 before the Midwest Spread created a marketable opportunity. Alcoa holds a much lower weight in the strategy at 1.10% of net assets, though I believe the theme can apply to all constituents if import duties were to persist.

Overall, PICK can be considered as both a microeconomic and macroeconomic investment strategy given the ETF’s global footprint and general demand across regions and industries. At the microeconomic level, more efficient mining practices and ESG policies can influence the cost of production, or the all-in cash cost.

Investor Suitability

PICK can be utilized by investors seeking a diversified equity strategy tied to the global metals & mining industry. PICK may be best utilized as a buy-and-hold ETF given its relatively light trading volumes. PICK may also be utilized as part of an industry rotation or a macroeconomic strategy given the diverse portfolio of commodity producers. In terms of growth expectations in the fund, a benefit of owning the commodity producers over the commodities outright is that commodity producers gain exposure to stronger commodity prices, cost management, and cash flow generation; owning a portfolio of commodities is limited to the aggregate increase in commodity prices with no additional economic upside potential.

Risks Related to PICK

PICK may expose investors to a variety of risks that should be considered prior to making an investment decision, particularly when considering its global exposure. International trade, geopolitical risk, war, ESG policies, inflation rates, commodity prices, fuel costs, transportation costs, and interest rates can all influence the performance of the underlying companies within the portfolio.

Final Thoughts

PICK can be utilized as a diversified metals & mining investment strategy for investors seeking to participate in the cash flows earned by companies with direct exposure to industrial and base metals. I believe PICK offers investors greater value over investing in a commodity-based portfolio given that the producers provide more economic upside beyond the commodity price. Given the international footprint of the portfolio, investors must consider international trade risk when evaluating whether a broad strategy is appropriate for their investment needs.

This article answers three main questions about PICK:

• What type of investor is PICK most suitable for?
• Does PICK offer diversification to foreign companies?
• Is PICK considered an income ETF or is it focused more on capital appreciation?