ETF Odds & Ends: iShares’ Mini Gold Fund

Last week, iShares rolled out a miniature version of the $29 billion iShares Gold Trust (IAU). The iShares Gold Trust Micro (IAUM) comes with a much smaller handle, and costs just 0.15%, 10 basis points lower than the fee charged by IAU.

The new ETF lists on the NYSE Arca.

“We launched IAUM really to attract the buy-and-hold investor base—your investors that might not trade as frequently but have a conviction around gold that they think is more of a medium-to-longer term allocation,” said Dorothy Lariviere, a member of BlackRock’s institutional product consulting team for its iShares arm.

The move by iShares is reminiscent of the 2018 launch of the now $4.4 billion SPDR Gold MiniShares Trust (GLDM), a lower-cost version of the $60 billion SPDR Gold Trust (GLD). While GLD charges 0.40%, the newer GLDM comes with an expense ratio of just 0.18%, 3 basis points more than IAUM.

Lariviere notes that IAUM’s price on its first day of trading was $17-$18 per share, whereas the trading price was roughly $34 for IAU. While for smaller, buy-and-hold investors the lower share price and expense ratio of IAUM are more attractive, IAU caters more to institutional investors who tend to be more active and can save on trading costs, as the larger handle means they don’t have to trade as many shares.

Other ETF Launches

There were a number of additional launches of note last week, including three actively managed ETFs from American Century that debuted on July 1. Those funds and their expense ratios are as follows:

• American Century Emerging Markets Bond ETF (AEMB), 0.39%
• American Century Multisector Income ETF (MUSI), 0.35%
• American Century Sustainable Growth ETF (ESGY), 0.39%

All three funds list on the NYSE Arca.

AEMB’s managers select its components mainly from the bonds in the JP Morgan EMBI Global Diversified Index using a process that incorporates fundamental research, quantitative model inputs and qualitative criteria.

MUSI invests mainly in a wide range of domestic and foreign debt securities issued by corporate and government entities, relying on quantitative and fundamental research to drive a sector rotation approach.

ESGY is the sole equity fund in the trio, and uses a combination of fundamental analysis and ESG research to assign scores to the stocks, according to the funds’ prospectuses.

On the same day, newcomer Alexis Investment Partners made its debut in the ETF arena with the Alexis Practical Tactical ETF (LEXI). The fund comes with an expense ratio of 1.03% and lists on the NYSE Arca. It invests in securities across multiple asset classes based on a variety of indicators, according to the fund document.

Earlier in the week, another two actively managed ETFs made their debuts. The LeaderShares Dynamic Yield ETF (DYLD) has wide latitude to invest in fixed income securities rated investment grade or high yield. It charges an expense ratio of 0.75% and lists on the NYSE Arca.

The Sparkline Intangible Value ETF (ITAN) relies on a methodology based on Sparkline Capital’s in-house intangible-augmented intrinsic value approach. The fund uses criteria around human capital, brand equity, intellectual property and network effects to select a portfolio of U.S. equity securities.

Closures

Another two ETFs are slated for closure, with the Pacer Military Times Best Employers ETF (VETS), which launched in 2018, set to see its last day of trading on July 27. The Pacific Global Focused High Yield ETF (FJNK), which launched in 2019, is also scheduled to shut down, with its last day of trading expected to be July 30.

Closures have had a slow start this year, with the number of completed shutdowns at less than 25 compared to nearly 150 by this time last year.

Name & Index Changes

A number of ETFs also underwent a variety of changes. At the start of the month, the ClearBridge Focus Value ETF (CFCV) changed its name to the ClearBridge Focus Value ESG ETF, while the ClearBridge All Cap Growth ETF (CACG) changed its name to the ClearBridge All Cap Growth ESG ETF.

On July 2, the Roundhill MVP ETF (MVP) changed its name to the Roundhill Pro Sports, Media & Apparel ETF.

Several ETFs also switched their indexes. On June 30, the Invesco Financial Preferred ETF (PGF) changed its index from the Wells Fargo Hybrid and Preferred Securities Financial Index to the ICE Exchange-Listed Fixed Rate Financial Preferred Securities Index. The Invesco Variable Rate Preferred ETF (VRP) changed its index from the Wells Fargo Hybrid and Preferred Securities Floating and Variable Rate Index to the ICE Variable Rate Preferred & Hybrid Securities Index.

A handful of actively managed iShares ETFs are set to adopt indexes between Sept. 1 and the end of the year. Those funds and the indexes they will track, are as follows:

• The iShares Interest Rate Hedged Emerging Markets Bond ETF (EMBH) will track the BlackRock Interest Rate Hedged Emerging Markets Bond Index.
• The iShares Interest Rate Hedged High Yield Bond ETF (HYGH) will track the BlackRock Interest Rate Hedged High Yield Bond Index.
• The iShares Interest Rate Hedged Long-Term Corporate Bond ETF (IGBH) will track the BlackRock Interest Rate Hedged Long-Term Corporate Bond Index.
• The iShares Interest Rate Hedged Corporate Bond ETF (LQDH) will track the BlackRock Interest Rate Hedged Corporate Bond Index.
• The iShares Inflation Hedged Corporate Bond ETF (LQDI) will track the BlackRock Inflation Hedged Corporate Bond Index.

Expense Ratio Changes

Expense ratio changes for several ETFs went into effect during the week, with the most notable being the fee reductions for two SPDR funds taking effect on June 29. The SPDR Portfolio Corporate Bond ETF (SPBO) saw its cost reduced from 0.06% to 0.03%, while the SPDR Portfolio Aggregate Bond ETF (SPAB) shaved 1 basis point off its expense ratio, taking it from 0.04% to 0.03%.

On July 1, The Cannabis ETF (TCHX) raised its expense ratio from 0.70% to 0.75%. At the same time, the Innovator MSCI Emerging Markets Power Buffer ETF - July (EJUL) increased its expense ratio from 0.89% to 0.90%, while the Innovator 20+ Year Treasury Bond 5 Floor ETF – Quarterly (TJFL) increased its expense ratio from 0.79% to 0.80%.

Contact Heather Bell at [email protected]