By Carl Delfeld of the Chartwell ETF Advisors
News of a possible takeover for Rio Tinto from Australian rival BHP Billiton has helped the Australian ETF (EWA) get off to a postive note on Thursday morning. Rio Tinto and BHP are two of the top holdings in the Australian ETF basket.
Rio surged 16.7% after BHP confirmed it had sent a letter to the Rio board to discuss a possible merger, but the approach was rejected. BHP rose 6.4%. The news of a possible mega-merger in the mining sector kickstarted hopes for further deals, sending mining stocks sharply higher across the board.
The Australian ETF (EWA) has also benefited from being at the sweet spot of the commodity and Asian trading theme. BHP, the company with the largest weighting in the ETF basket, recently reported huge new exploration opportunities. Mr. Marius Kloppers will soon occupy the CEO chair so capably executed by Chip Goodyear. The talented management team of BHP should continue to drive growth in a conservative manner without costs getting out of hand.
The Australian ETF has been a consistent performer as part of Chartwell ETF's model portfolios and was added to its Asian Opportunity portfolio yesterday.