US Global Files For Dividend Miners ETF

August 01, 2013

U.S. Global Advisors plans to offer ETFs, with its first play a global precious metals mining fund targeting dividend yield.

[Editor’s note: A previous story on identified the filing as a retraction. It is merely a correction. We apologize for the error.]


U.S. Global Investors, the firm who filed regulatory paperwork on Tuesday requesting “exemptive relief” to market exchange-traded funds, seemingly retracted that filing on Wednesday.

However, the San Antonio, Texas-based financial advisory firm does indeed intend to market exchange-traded funds, the first of which is likely to be the U.S. Global Investors Gold and Precious Metals Miners ETF.

According to the withdrawal request, the initial prospectus was, “errantly filed on behalf of U.S. Global Investors Funds, which is not requesting the relief described above.” The request also stated that the “applicants” (named therein as U.S. Global Investors Funds, U.S. Global Investors ETF Trust and U.S. Global Indices, LLC, collectively) therefore requested to withdraw the application.

The filing was apparently intended on behalf of U.S. Global Investors, but was errantly filed on behalf of U.S. Global Investors Funds.

Per the original filing, the proposed initial fund will dip into the corner of equity investing targeting returns of the precious metals mining process rather than betting on the prices of underlying precious metals themselves.

While mining funds aren’t entirely isolated from fluctuations in gold and other precious metals, these funds are far less likely to closely track the yellow metal’s price moves the way, say, the gold bullion ETF, SPDR Gold Trust (NYSEArca: GLD), has followed gold sharply lower this year.

The U.S. Global Investors Gold and Precious Metals Miners ETF will take an additional safeguard against gold-price volatility by tracking an index that selects securities only if they pay a dividend. It enters into the ring to face four contenders, the largest of which is the iShares MSCI Global Metals & Mining Producers ETF (NYSEArca: PICK). PICK has $225 million in assets under management and a dividend yield of 2.16 percent.

Although PICK doesn’t have the highest dividend yield of the metals and mining funds that pay dividends, it’s the least expensive, at 39 basis points, or $39 for each $10,000 invested.

The U.S. Global Investors Gold and Precious Metals Miners ETF doesn’t yet have a price tag or a ticker.

The index underlying the fund only holds securities with a market cap of $500 million or more, and demands liquidity of its constituents by snagging only those that trade at least $1 million per day. The securities in the index are production-weighted, and the index will rebalance quarterly.

“Exemptive relief,” which refers to exemptions from particular sections of the Investment Company Act of 1940, allows advisors to bring ETFs into the market. It generally takes anywhere from six to 18 months for a particular fund to come to fruition.

U.S Global Investors will serve as initial advisor to the ETF, the filing said.


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