Daily ETF Watch: Merk Gold ETF Arriving

May 15, 2014

Smaller investors can now redeem their shares for physical gold with this new ETF.

The Merk Gold Trust, currency expert Axel Merk’s proposed physical gold ETF, is set to launch on Friday, May 16 on the NYSE Arca under the ticker “OUNZ,” according to an NYSE communique. The fund, in registration for almost two years, will compete with well-established funds, including the SPDR Gold Shares (GLD | A-100) and iShares Gold Trust (IAU | A).

Merk’s latest offering’s marketing niche lies in the fact that it will allow smaller retail investors in the trust to take delivery of physical gold in exchange for their shares. In comparison, physical redemptions in gold bullion ETFs such as GLD have been limited to authorized participants in lots of 100,000 shares, which is $12.5 million worth of gold bars at GLD’s current price of $126 a share.

Gold is widely viewed as a hedge against inflation, with the S&P 500 Index reaching new highs and the U.S. economy seemingly on track to a recovery following the 2008-2009 market crash. Still, investors would be wise to keep an eye on the yellow metal, which has appreciated more than 8 percent year-to-date, beating the S&P’s 2.1 percent rise.

The Merk Gold Trust comes with an annual fee of 0.40 percent, or $40 for every $10,000, according to the firm’s website.

GLD, which has more than $32 billion in assets under management, also has an annual expense ratio of 0.40 percent.

IAU from iShares, which has almost $7 billion in assets, is lowest in class in terms of price, with an annual expense ratio of 0.25 percent.

Another physical gold fund available to U.S. investors is the ETFS Physical Swiss Gold (SGOL | A-100). It has assets of $1.1 billion and an annual expense ratio of 0.39 percent.

Launches

On May 29, Invesco PowerShares Capital Management plans to launch the PowerShares Multi-Strategy Alternative Portfolio (LALT) on the Nasdaq Stock Market. The fund is designed to help investors dampen volatility at a time when market observers are expecting a rise in interest rates and a pullback in broader markets.

Alternative strategies seek to minimize volatility when markets experience wild swings, but they trail broader markets during big run-ups.

For example, the IQ Hedge Multi-Strategy Tracker ETF (QAI | C-70) is up 1.5 percent year-to-date and 5.5 percent in 2013. By comparison, the S&P 500 Index is up about 2.2 percent year-to-date after a 32 percent surge last year.

The PowerShares Multi-Strategy Alternative Portfolio will invest in a combination of equity securities, futures contracts and other securities using long/short and other alternative investment strategies, according to an updated regulatory filing.

The fund has an expense ratio of 0.96 percent, or $96 for every $10,000 invested.

Filing

JPMorgan has updated regulatory paperwork for its proposed smart beta offering, the JPMorgan Diversified Return Global Equity ETF to include tickers (JPGE) and fees, 0.38 percent, or $38 for every $10,000 invested.

The fund is coming to market at a time when issuers are slicing and dicing the broader market indexes in an attempt to offer investors an alternative to straight-laced market-cap offerings such as the SPDR S&P 500 ETF (SPY | A-97).

 

The fund will track the FTSE Developed Diversified Factor Index, which comprises equity securities from developed global markets selected to represent a diversified set of factor characteristics, including relative valuation, price momentum, low volatility and specific market capitalization, according to the filing.

 

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