Research - JUNE 28, 2017

U.S. Global Investors launches “GOAU” Gold Royalty ETF

by Released

U.S. Global Investors, a San Antonio–based investment adviser, has launched the U.S. Global GO GOLD and Precious Metal Miners ETF.

GOAU is a smart factor, passively managed fund that is designed to track the U.S. Global GO GOLD and Precious Metal Miners Index. GOAUX is designed to capture the performance of companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means.

Meeting continued demand in the precious metals space, GOAU created a smart factor model that places special emphasis on firms showing the highest revenue per employee. This factor yields royalty and streaming companies, which the firm considers to be the “smart money” of the metals and mining space.

Royalty companies serve as special financiers that provide upfront capital to help fund producers’ exploration and production projects. In return, they receive royalties on whatever is produced or rights to a “stream.” A stream is an agreed-upon amount of gold, silver or other precious metal at a fixed, lower-than-market price.

With GOAU, investors will gain exposure to the precious metals space, but with potentially less risk. Rather than focusing solely on mining stocks with large market caps, GOAU seeks high-quality, well-managed producers with a proven track record of profitability, even when precious metals prices are down. Royalty companies can possibly help investors manage many common risks associated with traditional producers.

“U.S. Global Investors has a long-standing history in the precious metals space; we are known for gold, and our boots-on-the-ground knowledge of the industry is strong,” said Frank Holmes, CEO and chief investment officer of U.S. Global Investors. “Throughout our years of investing in the gold mining space, we have found that royalty companies have tended to be excellent allocators of capital, taking on very little debt and deploying cash reserves only at the most opportune times.”

The U.S. Global GO GOLD and Precious Metal Miners Index uses a smart factor, rules-based model consisting of common stocks listed on well-developed exchanges across the globe. GOAUX seeks to identify companies with strong balance sheets and attractive portfolios of active mines, among other factors. Companies that rely primarily on debt to finance their business are eliminated from the index.

GOAUX is rebalanced and reconstituted quarterly. The expense ratio is 0.60 percent.


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