SLX ETF

Kenny Dichter, Real SLX founder and chairman, joins 'Squawk Box' to discuss what Dichter is trying to do with Real SLX, what the club is, and much more.

SLX has been moving sideways over the past year, albeit with significant price swings in either direction. With supply still reasonably strong and demand softness persisting, steel futures appear to be testing new lows this year. Moreover, the political climate may not be conducive to interest rate cuts in the near future, which could further hamper steel demand.

VanEck Steel ETF is performing well and offers exposure to the global steel industry. China's influence on the steel market makes investing in steel mining stocks potentially lucrative. SLX has a concentrated portfolio of 25 companies and offers access to global steel industry growth, but comes with risks.

The VanEck Steel ETF is the closest thing to a pure-play steel ETF currently available. SLX carries a relatively high management fee for a passive fund. SLX holds a concentrated group of just 26 stocks and the largest holding, Rio Tino Plc, is not a pure play on steel.

Steel is a critical building block for construction projects and various products, making it an important indicator of the global economy. U.S. and Chinese steel prices have declined, with Chinese prices stabilizing in recent weeks. VanEck Steel ETF, a diversified steel fund, has seen a bullish trend and offers an attractive dividend yield, but its performance is dependent on Chinese economic strength.

Cyclical stocks, including those in the energy, financials, industrials, and materials sectors, are gaining strength, with the VanEck Steel ETF ranking first out of 37 in its sub class by Seeking Alpha's quant rankings. SLX, a relatively small fund with $128m assets under management, offers investors one-trade access to the steel industry and global industrialization, with a high yield of 4.1% on a trailing 12-month basis. Despite potential volatility in the coming months, the fund has high relative strength, strong quant ranking.

The March U.S. ISM Manufacturing number did no favors for the 'no recession' camp. Still, economically-sensitive stocks are holding their own, and I see many global steel equities in the SLX ETF as attractive on valuation.