The Benefits Of A Diversified Precious-Metals Exposure
July 26, 2016
by Robert Huebscher
Recently, Bruce Greenwald carried out a virtual Fireside Chat with Li Lu, the founder and chairman of Himalaya Capital. Greenwald and Lu covered multiple topics during the discussion, addressing everything from the value investor's approach to appraising businesses and what he had learned from his great friend Charlie Munger. The duo also discussed China's economy Read More
ETF Securities provides accessible investment solutions, enabling investors to intelligently diversify their portfolios beyond traditional asset classes and strategies. They are pioneers in specialist investments, having developed the world’s first gold exchange-traded commodity. It offers one of the most comprehensive ranges of specialist exchange-traded products (ETPs) covering commodities, foreign exchange and thematic equities traded on major exchanges across the world.
I spoke with Maxwell Gold, director of investment strategy at ETF Securities, on July 15.
Your firm is best known for its gold-based ETF (SGOL) and its precious metals-based ETF (GLTR), but those are only two of nine ETFs you offer for U.S. investors, which are part of a larger lineup of exchange-traded products. Can you please provide some background on the history of your firm and the strategy behind the product line you have developed?
Our firm was founded on the principle of being an innovator within the commodities space. We’ve recently branched out into broader alternative investment solutions, and that’s where we see ourselves having an opportunity to continue to add value for clients and investors through product innovation.
We launched the world’s first physically backed gold ETF in 2003 overseas and expanded our footprint in commodities across Europe and the U.K. In the U.S., we’ve continued this heritage through our core product suite within the precious metal complex – including a broad-based precious metals physical basket (GLTR) and individual physically backed gold, silver, platinum and palladium ETFs. But beyond that, we have looked to branch out into other strategies that are focused on providing access to unique or alternative exposures that advisors and investors can utilize within asset allocations. We have four equity funds, including two smart beta products and two Zacks earning factor products where we offer investors access to unique thought leadership in an ETF wrapper.
We continue to look for key themes and factors that are driving alternative exposures for advisors and investors to utilize within the broader context of their portfolios.
What trends are you seeing now in your precious metals funds, particularly with respect to flows and performance?
We are seeing strong interest so far this year. It’s been a great story for precious metals and, to a larger extent, the commodity complex so far in 2016.
Rewinding to the end of 2015, the Fed had just started its rate-hiking cycle by raising rates 25 basis points in December, and sentiment for precious metals and commodities in general was very negative.
That has since seen a complete reversal. Investor sentiment has come online and reversed from what had been net bearish to net bullish as well as extending their long positioning to record highs in gold and other precious metals.
This change has been on the back of a lot of uncertainty in the global macroeconomic environment and expectations of a slower path of the Fed’s hiking cycle, as well as diverging monetary policies between the U.S., Europe, Japan and other emerging markets’ central banks. There remains a lot of uncertainty and a lot of macro headwinds as the global economy looks to sluggishly extend its growth following a weak recovery from the financial crisis of 2008.