Hybrid Gold ETF Debuts

The new fund combines exposure to gold derivatives with physical gold.

Reviewed by: Heather Bell
Edited by: Heather Bell

Today, USCF rolled out a first-of-its-kind gold ETF subadvised by SummerHaven Investment Management that can invest in gold futures and options as well as physical gold. The USCF Gold Strategy Plus Income Fund (GLDX) offers investors exposure to the price of gold in addition to income from selling call options and an actively managed collateral portfolio.

GLDX comes with an expense ratio of 0.45% and lists on the NYSE Arca.

In addition to an allocation to physical gold of up to 20%, the fund’s portfolio can include gold warrants, futures, options contracts and other derivative instruments. GLDX’s approach includes a covered call strategy with gold options, which will generate premium income, the prospectus says.

The fund’s structure also uses a wholly owned Cayman Islands subsidiary.

According to SummerHaven Managing Partner Kurt Nelson, the collateral portfolio will be actively managed and include Treasury securities of different durations with the intention of further adding to GLDX's income.

He notes that GLDX could be a replacement or a complement to a fund like the SPDR Gold Trust (GLD), which charges 0.40% but offers only exposure to physical gold with no potential for income.

Contact Heather Bell at [email protected]

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.