“The assets that have gone into the … PDBC [are] a good proof point that there’s demand for this new structure,” he says.
And then there’s the suite of commodities ETFs launched in March by one of Rhind’s former employers, ETF Securities, all of which are sans K-1s and track Bloomberg commodity indexes while employing active management in an effort to produce total returns that beat those indexes.
The Bloomberg All Commodity Strategy K-1 Free ETF (BCI) and ETFS K-1 Free Bloomberg All Commodity Longer Dated Strategy ETF (BCD) both have expense ratios of 0.29 percent and roughly $3.7 million in AUM apiece. BCI is down 2.52 percent year-to-date and BCD is down 2.31 percent. The expense ratio of the ETFS K-1 Free Bloomberg Energy Longer Dated Strategy ETF (BEF) is 0.39 percent and it has more than $3.7 million in AUM. It is down 10.6% since inception.
Rhind says he plans to make GraniteShares into a firm that launches multiple funds across multiple asset classes. He opines that many ETF entrepreneurs don’t have a holistic vision of their firm beyond one or two funds they launch.
He says the vision of making GraniteShares into a larger company that will launch many funds attracted the attention of Bain Capital, which is making its first foray into the ETF industry with its investment in Rhind’s company. GraniteShares had a seed round for investors and raised a total of $3.5 million, with Bain the majority investor, along with other unnamed investors.
Rhind says he wants GraniteShares to compete on price, and he’s not concerned about competition from the dominant low-cost leaders—BlackRock’s iShares unit and Vanguard. Although BlackRock offers commodities funds, he points out that Vanguard doesn’t offer commodities.
And, Rhind says, people have told him they are looking for quality alternatives to the two big names in order to diversify their ETF holdings.
“This [ETF] market is growing 20 percent per annum, it has a $4 trillion asset base . . . clearly there are opportunities for more people to enter,” he says.