Van Eck Global expanded its fledgling exchange-traded fund (ETF) empire on Monday, October 16, launching two highly-specialized ETFs onto the American Stock Exchange (Amex).  The new Market Vectors - Environmental Services ETF (AMEX: EVX) and Market Vectors - Steel ETF (AMEX: SLX) joined Van Eck's flagship Market Vectors - Gold Miners ETF (AMEX: GDX), which debuted on May 22^nd. That fund, which holds shares in gold mining companies, has attracted a healthy $252 million - apparently enough to convince Van Eck that it wants to stay in the ETF game.

The prospectus for the two new ETFs is available here.

At first glance, it seems unlikely that the new Van Eck ETFs will repeat GDX's fairly rapid success.  After all, steel and trash don't have the … umm …. luster of gold.  But the indexes these funds track have turned in strong performances over the past five years: using historical data, the Amex Steel Index has delivered compound annualized returns of 30.91 percent per year, while the Amex Environmental Services Index has delivered 15.34 percent per year.

The Steel Index is a modified market-cap-weighted index of 39 companies engaged in the production of steel products and the mining and processing of iron-ore. No component is allowed to make up more than 20 percent of the total company.  The index is dominated by foreign names, which are held as American Depository Receipts. The top three stocks include two Brazilian companies (Compania Rio de Vale and Rio Tinto) and the Indian giant Mittal, and together, these three firms make up nearly 39 percent of the index.

The Environmental Services Index focuses on companies engaged in both consumer- and industrial-waste disposal and recycling; in other words, trash. The index uses an unusual weighting methodology: First, it ranks components by market capitalization. Then, it assigns each of the top four companies a 10 percent weight. It then assigns the five smallest components a weight of two percent each. The middle components - 15 at last count -- are equally weighted to represent the remaining 50 percent of the portfolio, meaning each is assigned a 3.33 percent weight.  This unusual weighting scheme appears designed to boost the influence of small-cap stocks in the portfolio, a potentially important feature in an industry where consolidation is an important and ongoing process.

Like the Gold Miners ETF, the new funds charge 55 basis points in expenses; in each case, this reflects a fee waiver by the company.

For coverage of Van Eck's Gold Miner's ETF, see our earlier articles here and here.