FactorShares submitted a prospectus with the U.S. Securities and Exchange Commission (SEC) to market three new exchange-traded funds (ETFs) under the brand name PureFunds. The funds will invest in diamond mining and retailers (PureFunds ISE Diamond/Gemstone ETF), exploration companies (PureFunds ISE Mining Service ETF) and silver mining companies (PureFunds ISE Junior Silver ETF) and have expense ratios of 0.69 per cent. The fund managers plan to launch the ETFs before the end of 2012. %% ''The PureFunds ISE Diamond/Gemstone ETF aims to track the supply and demand cycles of the rough and polished precious stone industry,'' said Paul Zimnisky, the co-founder of PureFunds. ''The demand for diamonds and other gemstones has significantly increased over the past years as global investors look for hard assets as a potential safe harbour from the degradation of fiat currency. Our mining service and silver explorer fund were also designed to leverage the increasing demand for hard assets like gold and silver.'' %% Specifically for the diamond and gemstone ETF, expected to trade with the NYSE Arca ticker GEMS, the fund managers will use a replication strategy, which is an indexing method for investing in securities of the underlying index as opposed to holding hard assets such as rough or polished diamonds. The fund may utilize a representative sampling strategy with respect to that index when a replication strategy might be detrimental to shareholders and when there are practical difficulties or substantial costs involved in compiling a portfolio of equity securities to follow the underlying index. %% The principal risks associated with this fund include loss due to adverse occurrences that may affect the industry or group of industries, localized political and civil strife, indirect and direct exposure to foreign currencies, emerging markets and the changing demands for gemstones and jewelry. %% The fund is not actively managed and therefore would not sell an equity security due to current or projected underperformance of a security, industry or sector, unless that security is removed from the underlying index.