In what seems a lifetime ago, I was the equity index trader at a big bank on Bay Street. Although a lot has changed since then, there are parts of the game that are timeless. So I am putting my old hat back on to analyze VanEck’s recent problems arising from the success of their GDXJ ETF (Junior Gold Miners). And lest you think this will be a boring ETF specific piece, I urge you to suffer through the details as I believe the market is missing the bigger picture message.
For those unaware, VanEck recently announced they were halting the creation of the their GDXJ 3x times Bull shares (JNUG) because they were running into constraints. In fact, the popularity of the GDXJ ETF product has been so overwhelming, VanEck also reported they would be changing the index rules to accommodate the increased demand. From Bloomberg:
Just my opinion but there are too many big companies in this index for it to be called "Junior"
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