AdvisorShares today launched four actively managed exchange-traded funds that finance gold purchases in currencies other than the U.S. dollar. Three of the funds are focused on one specific currency––the AdvisorShares Gartman Gold/Euro ETF (GEUR), AdvisorShares Gartman Gold/British Pound ETF (GGBP) and AdvisorShares Gartman Gold/Yen ETF (GYEN).
As their names imply, GEUR uses the euro to fund its gold position while GGBP works via the pound and GYEN employs the yen.
The AdvisorShares International Gold ETF (GLDE) will invest in a basket of exchange-traded products that utilize the euro, pound, yen and U.S. dollar to make gold purchases.
All of these strategies provide diversification and the ability to neutralize U.S. dollar risk by providing investors the option to choose an alternative funding currency for their gold purchases other than the commonly used dollar, according to AdvisorShares.
All four funds are sub-advised by Treesdale Partners, a New York City-based registered investment advisor with a forte in managing fixed income-based and currency/commodity-based alternative investment products. Treesdale is following an investment strategy used by Dennis Gartman, editor and publisher of The Gartman Letter, that uses different currencies to fund a gold position.
“I’ve learned that owning different commodities, especially gold, in different currency terms can provide added-value for any investor’s alternative allocation,” Gartman said in a press release. Gartman worked with AdvisorShares and Treesdale to develop the three Gartman gold ETFs, and will continue to partner with AdvisorShares to educate financial advisors and investors about investing in gold in different currency terms.
According to AdvisorShares, the foreign currencies are obtained through the sale of either exchange-traded currency futures or over the counter foreign exchange forward contracts. The funds will assess the dollar and corresponding foreign currency yield curve to gauge the most positive net effect to purchase gold in different currency terms.
To minimize the exposure of the fund to more volatile longer-term interest rates, the chosen maturity for funding these ETFs won’t exceed six months.
GEUR, GGBP and GYEN all have expense ratios of 0.65 percent.
GLDE takes a different tack by holding a variety of ETPs to provide diversified currency exposure to the international gold market. The fund’s portfolio will hold the three Gartman gold ETFs, along with unaffiliated open-end and closed-end funds. As part of its seeding to get GLDE off the ground, the fund initially held a nearly 20 percent stake in the PowerShares DB Gold Fund (DGL).
GLDE’s expense ratio is 1.52 percent.
AdvisorShares says none of its four gold ETFs are subject to Unrelated Business Taxable Income (UBTI) and won’t entail a Schedule K-1 that’s often required with commodity-based investments.
Bethesda, Md.-based AdvisorShares offers a suite of 19 actively managed ETFs with more than $1.2 billion in total assets under management.