First Trust Launches Gold & Income ETF

March 03, 2021

Today, First Trust rolled out another gold-focused fund. The FT Cboe Vest Gold Strategy Target Income ETF (IGLD) holds a portfolio of flexible exchange (FLEX) options on the SPDR Gold Trust (GLD) along with short-term Treasuries and cashlike assets in an effort to gain exposure to the performance of gold while generating income.

IGLD comes with an expense ratio of 0.85% and lists on Cboe Global Markets.

Like the gold ETF that First Trust launched in January, the fund is subadvised by Cboe Vest Financial. IGLD buys call options and sells put options on GLD to get exposure to the underlying ETF’s performance. It also aims to generate income 3.85% higher than the annual yield offered by one-month Treasuries by implementing a partial covered call options strategy on GLD that provides premiums, according to the prospectus.

Essentially, the investor gets reduced exposure to the performance of GLD but also sees yield generated through the covered call strategy, which, according to a press release, allows for some of GLD’s positive returns to be turned into premium income.

"Historically, gold has been an important tool for many investment advisors seeking to enhance diversification within their clients’ investment portfolios, while also providing a potential hedge against inflation. We believe this ETF will be useful not only for pursuing those objectives, but also as an income strategy," said First Trust ETF Strategist Ryan Issakainen.

In January, First Trust launched the FT Cboe Vest Gold Strategy Quarterly Buffer ETF (BGLD). The fund offers buffered downside exposure to the performance of GLD, protecting against losses between 5% and 15%, while capping upside performance. BGLD resets and adjusts its upside cap on a quarterly basis.

Contact Heather Bell at [email protected]

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