New ETF Manages Gold Risk

Wilshire Phoenix makes its debut with an ETF that allocates between gold and cash.

Reviewed by: Heather Bell
Edited by: Heather Bell

Yesterday saw the debut of a new issuer and the launch of a different kind of gold ETF.

The Wilshire wShares Enhanced Gold Trust (WGLD) solely holds physical gold and cash, adjusting its allocation between the two assets based on the level of market volatility.

WGLD comes with an expense ratio of 0.65% and lists on the NYSE Arca.

“Existing gold ETFs simply offer exposure to gold. And that is not a bad thing, but they are all essentially the same in that regard. The most innovation that has happened in the gold ETF market is the physical location of where the gold is stored, or the types of gold bar that an ETF holds,” said Wilshire Phoenix Managing Partner Bill Herrmann, describing WGLD as offering a “more thoughtful approach.”

The fund tracks an index that determines its split between gold and cash by looking at the realized volatility of both the S&P 500 Index and the price of gold. When gold’s volatility increases, the fund increases its exposure to cash, while it shifts more into gold when volatility increases in the S&P 500.

WGLD adjusts its allocations on a monthly basis, and while it can have 100% exposure to gold, it never has more than 50% of its portfolio allocated to cash, according to the prospectus.

Herrmann points out that gold, despite being seen as a safe haven by many investors, can often be quite volatile. He describes Wilshire Phoenix’s volatility-adjusted approach as “adaptive exposure,” and notes it can be applied to basically any asset class as a way to manage risk exposure.

He further adds that WGLD does not use leverage or rely on derivatives.

Contact Heather Bell at [email protected]

Heather Bell is a former managing editor of 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.