GraniteShares’ New Low Cost Gold ETF

GraniteShares’ New Low Cost Gold ETF

‘BAR’ comes in 5 basis points cheaper than the existing lowest-cost physical gold ETF.
Reviewed by: Staff
Edited by: Staff

New ETF firm GraniteShares is continuing to make its low-cost mark with its latest launch. The GraniteShares Gold Trust (BAR) comes with an expense ratio of 0.20%; that’s 5 basis points cheaper than the previous lowest-cost physical gold ETF, the iShares Gold Trust (IAU).

“It’s just continuing the theme of offering low-priced commodity ETFs that haven’t been available before,” said Will Rhind, founder and CEO of GraniteShares.

BAR lists on the NYSE Arca.

The fund has some other distinguishing characteristics that set it apart. For one thing, it uses a different firm for custody—ICBC Standard Bank Plc—than any of the other major physical gold ETFs. This means that, beyond costs, BAR could appeal to investors looking to diversify their exposure to any risks associated with custodianship.

“We’ve deliberately done that so people can diversify their gold holdings and vault risk away from HSBC or J.P. Morgan,” Rhind said.

Further, each share represents 1/10 of an ounce of gold. Shares of IAU, which is also the second-largest physical gold ETF, represent 1/100 of an ounce. BAR’s larger size means the fund’s trading costs are reduced relative to IAU because you’re trading fewer shares to invest the same amount of money.

GraniteShares rolled out two low-cost broad commodities ETFs in May. The GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB) is the cheapest fund in its class, at 25 basis points, while the GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF (COMG) also ranks near the bottom of the class, with an expense ratio of just 0.35%. The funds also are structured as ’40 Act vehicles with Cayman Island subsidiaries and have no associated K-1 tax forms.

Elkhorn Acquired By Turner Investments

On Wednesday, Turner Investments announced its acquisition of Elkhorn Capital Group, the ETF firm founded by Ben Fulton after he left Invesco PowerShares.

Elkhorn has 13 ETFs, with a total of nearly $170 million in assets under management, with the bulk of that invested in the $130 million Elkhorn Lunt Low Vol/High Beta Tactical ETF (LVHB).

Turner investments is a registered investment advisor that has been in business for 25 years and has more than $30 billion in assets under management. The firm is an affiliate of Veracen, a global financial technology serving large asset managers.

Although it is a firm that has favored active management, its website stresses that a “disciplined, rules-based approach” is crucial for investment success, while the firm’s recent press release notes its use of factors and proprietary models.

“Turner’s 26-year history and strong distribution capabilities, together with Veracen’s technology platform, represent a perfect combination with Elkhorn’s ETF platform and product development capabilities,” Fulton said in a press release.


'Tectonic Shifts'

According to Turner Investments CIO and Founder Bob Turner, “The investment industry has witnessed tectonic shifts in technology, product structures, distribution channels, and fees over the past decade. This combination provides Turner with proprietary technology, added expertise, and unparalleled product development capabilities that we believe will deliver enhanced investment performance and value for both current and prospective clients over the long term.”

He added that Turner Investments would be shifting its investment focus to uncorrelated returns and “more predictable” investment processes, as well as more efficient and lower-cost product structures.

The press release notes that Ben Fulton will take on the role of head of global ETFs at the new entity, while Jordan Golz, another Elkhorn executive, will serve as head of global ETF product and business development.

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