Gold, China A-shares take center stage.
Axel Merk’s new physical gold ETF was far and away May’s most interesting fund launch, but three others warrant a mention as well. Those included one focused on small-cap stocks in China’s mainland market, and a pair of actively managed corporate bond funds with overlays controlling interest-rate risk.
The four ETFs are:
- Merk Gold Trust (OUNZ)
- db X-trackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS)
- iShares Interest Rate Hedged High Yield Bond ETF (HYGH)
- iShares Interest Rate Hedged Corporate Bond ETF (LQDH)
The proposed funds come at a time when investors are keeping a wary eye on the economic recovery in the U.S. while looking abroad for investment opportunities in the emerging markets. Investors are also bracing for rising interest rates as the Federal Reserve continues tapering its bond-buying program, and are looking for strategies to help dampen interest-rate risks.
Eleven new ETFs launched in May, totaling 80 ETFs that have launched year-to-date, compared with 55 in the same year-earlier period. All told, more than 1,580 ETFs are now listed in the U.S., with total assets under management at an all-time high of $1.805 trillion, according to data compiled by ETF.com analytics.
All That Glitters Is Gold
On the commodity front, OUNZ, currency expert Axel Merk’s proposed riff on existing physical gold ETFs, launched on May 16. It’s a twist on existing physical bullion ETFs, as it allows smaller retail investors to redeem their OUNZ shares for physical gold. It is entering a realm of well-established funds, including the SPDR Gold Shares (GLD | A-100) and the iShares Gold Trust (IAU | A-199).
Physical redemptions in gold ETFs such as GLD have been limited to authorized participants in lots of 100,000 shares, which is around $12 million worth of gold bars at GLD’s current price of $120 a share.
Gold is widely viewed as a hedge against inflation and as a safe haven, and while the S&P 500 Index reaches new highs and the U.S. economy appears to be slowly recovering, investors would be wise to keep an eye on the yellow metal should the eurozone slide back into recession.
With a fee of 0.40 percent, or $40 for every $10,000 invested—equal to GLD and only 0.15 percent more than IAU—OUNZ is well positioned to shake up the gold ETF market, ETF.com analyst Scott Burley said in a recent blog.
The fund, which launched on May 16, now has almost $42 million in assets under management, most of was gathered on May 22, according to data compiled by ETF.com Analytics.