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Posted by on Feb 13, 2014 in Active Management, AdvisorShares

Setting the Record Straight with ETF.com

Setting the Record Straight with ETF.com

AlphaBaskets strives to present relevant thought leadership and commentary which is why we feel compelled to set the record straight about a recent ETF.com post, “New Gold ETFs To Find Gold At Crossroad,” that covered AdvisorShares gold-based ETFs launch.  We feel the description provided an incomplete accounting of the new offerings.  For compliance reasons, we can’t mention the specific products or get into their features and benefits, but where the ETF space continues to evolve, it will be difficult for market participants to adequately keep up with the industry when analysis from a highly regarded information provider is inaccurate.

In comparing AdvisorShares new gold-based funds to industry standards from iShares and State Street, ETF.com makes the nominal observation that “none of the new ETFs are particularly cheap either.” This would be a helpful comment in discussing a plain vanilla me-too, physically backed gold fund.  However, as written, it ignores a series of strategic overlays that we believe will become very important over the next several years for how advisors access gold for their clients, and how individual investors access gold on their own behalf.

Where equity ETFs have long since left behind SPY and MDY as the only options in the marketplace, so too will GLD and IAU be left behind as the only gold ETFs to choose. This has also happened in the fixed income market and will occur in other ETF market segments too. Just as advisors and individuals have become more interested in strategic advancement in equities and fixed income ETFs, their interest will evolve with the advancement of commodity and currency ETFs.

The ETF.com post originally included the following quote:

“Currency markets are the most liquid in the world, so you can make currency bets cheaply but to do that and add gold exposure to it is just a fee-grab. It adds costs that don’t need to be there.”

That analytical observation promotes a misunderstanding of the actual strategy and the research into its potential efficiency as conducted by Dennis Gartman and Treesdale Partners. Additionally, as any advisor knows, the logistics of opening separate accounts for commodities and futures for clients, along with additional regulatory requirements for oversight and the expenses incurred to implement that oversight, will be a non-starter for most RIA firms.

The strategy being deployed across all four funds will be new to many investors and we invite readers to visit AdvisorShares.com to learn more.

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.

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