Given the performance of the market so far in 2014, it is pretty
safe to say that this year won't be as smooth as what investors saw
in 2013. With this added volatility hanging in the background and
fears over the taper, it could be a year to look once again at
lower risk investments.
And with the performance of commodities lately, the demand for
natural resources could be elevated, and particularly in the case
of precious metals like gold. After all, gold saw a terrible 2013,
but with sluggish stocks and worries over emerging markets, the
metal has come back into focus (also see
Inside 2013's Best Gold ETF
Gold ETFs have risen to start the year and hopes are again
springing for a solid run for the important precious metal. And
while investors have a number of ways to target gold with ETFs, a
new lineup of gold funds from AdvisorShares could break this space
wide open for investors who want to make a truly international play
with their gold investment.
New Gold ETFs in Focus
AdvisorShares announced that it was releasing four new active gold
ETFs, however, they have a twist. The funds will buy gold in
foreign currencies allowing precious metal investors to diversify
their holdings across currencies, and to help fight against U.S.
dollar losses (See
all the Currency ETFs here
In essence, the funds will short currencies and buy gold, looking
to give investors options to buy the precious metal in the most
undervalued markets. Thus, investors who are bullish on gold can
target their exposure in specific foreign currencies, thus making
an even more targeted-and global-bet on the precious metal market.
This novel approach will be taken with three currencies in
particular, the British pound, the Japanese yen, and the euro.
These currencies rank as the most liquid-after the dollar-and U.S.
investors can now use them to buy gold in the following funds:
AdvisorShares Gartman Gold/Yen ETF: GYEN
AdvisorShares Gartman Gold/British Pound ETF:
AdvisorShares Gartman Gold/Euro ETF: GEUR
All three of these new products look to charge investors 55 basis
points a year in management fees, and then have 15 basis points a
year in fees of 'other expenses'. However, the group has a five
basis point a year waiver, keeping the net expense ratio at 0.65%.
The products will be structured as traditional '40 Act funds, and
thus will avoid K-1 issues and other tax headaches for investors,
allowing them to be accounted for on a 1099.
All of the funds will obtain their currencies via exchange-traded
futures, or using over the counter foreign exchange forward
contracts. The respective currencies will also be borrowed
based on the yield curve in order to determine the most cost
effective maturity at which to borrow euros to fund the gold
Investors should also note that Dennis Gartman, of
the Gartman Letter
fame, will also be lending his expertise to the funds. Gartman is
well-known for his belief in cross trading of currencies and
commodities, and obviously these funds allow the masses to apply
this strategy to their own portfolios.
Beyond Gartman's involvement, Treesdale Partners will be
sub-advising the fund, a company that has a focus on managing
currency and commodity-based alternative investment products for
all the Broad Commodity ETFs here
"Dennis Gartman's widely recognized analysis and commentary among
leading corporate, financial and trading institutions is
well-known, and we believe Treesdale adds another deeply
experienced portfolio manager to the AdvisorShares active ETF
suite," said Noah Hamman, chief executive officer of AdvisorShares
in a press release. "We are pleased to partner with their combined
expertise in bringing more innovative investment solutions to the
active ETF marketplace."
Beyond these three, AdvisorShares also released a broad product
that goes across a number of currencies, the
AdvisorShares International Gold ETF: GLDE.
This product will use a combination of GYEN, GGBP, and GEUR for its
exposure, while it will also invest in some closed-end funds,
underlying ETFs, ETNs, or other exchange-traded products in order
to gain various types of exposure to the international gold market.
The fund will also be able to actively manage its exposure, so if
for example, managers believe that gold is undervalued in euros,
the product can shift its exposure to that currency. Investors have
to pay for this exposure though, as the management fee comes in at
80 basis points a year, while the net expense ratio is at 1.52%,
putting it at the very high end of the gold space, but in line with
other active commodity products on the market (it also has a '40
Act structure, eliminating the need for a K-1).
These ETFs are first-of-their-kind to target the gold market with
foreign currencies, while they are also the first to put an active
twist on the gold ETF world. However, they are by no means the
first gold ETFs to hit the market, as the space is already rife
with competition (see
all the Precious Metals ETFs
The biggest funds in the space are the
SPDR Gold Trust (
iShares Gold Trust (
, which have, respectively, $32 billion and $6 billion in assets
under management. Beyond these ultra-popular names though,
investors also have access to a variety of other gold ETFs,
including a product that houses all of its gold in Switzerland-
-and one that puts all of its bullion in Singaporean vaults-
Any of these products look to be fierce competitors for the new
gold foursome from AdvisorShares, and especially so since the
products listed above are all cheaper than the active ETFs from
AdvisorShares. Still, for investors looking for a new way to play
gold-and to make a bet on currencies too-the fresh funds from
AdvisorShares could be worth a closer look, and may open the gold
ETF world even more to retail investors.
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ETFS-ASIAN GOLD (AGOL): ETF Research Reports
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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