Pages Menu

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

Setting the Record Straight with

Setting the Record Straight with

AlphaBaskets strives to present relevant thought leadership and commentary which is why we feel compelled to set the record straight about a recent 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, 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 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 to learn more.