AdvisorShares, the ETF issuer from Bethesda, Maryland, has
long been a leader in active
ETFs
. The company has made a name for itself in this space with
ultra-popular products like
HDGE
and
HYLD
, while it also has been at the forefront of new strategies in
the space as well.
For the most part these new techniques have been focused in on
the equity and bond markets, but now we may be seeing a few new
additions to the commodity world as well. In one of the more
unique SEC filings as of late
, the company revealed that it was partnering with Treesdale
Partners to bring a new suite of four gold ETFs to market (read
Gold ETFs: Why Bid Ask Spreads Matter
).
While some key details were not released in the initial
filing-such as expense ratios-there was plenty of pertinent info
for investors to digest in the first SEC release. Below, we
highlight some of the key details from the filing, and why these
four proposed gold ETFs could offer up a completely new way to
play the space:
These four proposed funds all look to go beyond
dollar-denominated gold exposure, and give investors a way to
access the precious metal with a foreign currency tilt. This will
give investors a potentially better way to limit their dollar
exposure, or it could also allow for a more nuanced way for
investors to play gold across various currencies (read
The Guide to Gold ETF Investing
).
Additionally, investors should note that the funds will
utilize a Dennis Gartman approach, as the filing suggested that
Treesdale will be evaluating the gold market constantly and will
be relying on information from Gartman's daily piece 'The Gartman
Letter' for insight on the space. All will also be
structured as 'fund of funds' so investors could see an outsized
expense ratio thanks to acquired fund fees, although it is hard
to say what the total will be at this point in time.
The three targeted funds include gold ETFs that zero-in on
specific currencies in both Europe and Asia. These include the
yen, pound, and euro, giving investors a way to target gold in
these developed market currencies. These funds will, assuming
they pass regulatory hurdles, trade under the following names and
symbols:
-Gartman Gold/Yen ETF (GYEN)
-Gartman Gold/British Pound ETF (GGBP)
-Gartman Gold/Euro ETF (GEUR)
Beyond these three, arguably the most important of the four
will be the broad
AdvisorShares International Gold ETF (GLDE)
. The fund will primarily utilize the aforementioned three ETFs
in its basket, but it can also use various closed-end funds,
ETNs, or other ETFs in order to round out exposure as well (read
Time to Buy Junior Gold Mining ETFs?
).
It will also seek to adjust exposure among the various
currencies based on Gartman's outlook in order to help deliver to
investors some level of outperformance. In essence, the fund will
cycle among the various currency denominated funds in order to
find those that are expected to perform the best, giving a new
type of active management to the usually-passive gold space.
The Bottom Line
It is very hard to say how attractive these funds might be to
investors if they ever launch. While precious metal investments
remain ever-popular, active management is something that the
space hasn't really seen, and currency exposure hasn't really
been a factor at all (read
ETFs that We are Thankful For
).
The funds also look to have somewhat of an outsized expense
ratio so this could pose a problem for investors seeking cheap
ways to access the gold market. However, if the foreign currency
approach can deliver some outperformance, it isn't too hard to
imagine a little more competition for the likes of
IAU
,
GLD
, and
SGOL
in the already fierce gold ETF space at some point in 2013.
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@Eric
Dutram
on Twitter
Long IAU and gold bullion.
SPDR-GOLD TRUST (GLD): ETF Research Reports
ISHARS-GOLD TR (IAU): ETF Research Reports
ETFS-GOLD TRUST (SGOL): ETF Research Reports
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