Why isn’t Deutsche Bank having much luck with it’s collection of metals exchange traded funds (ETFs)? A closer look into one of their products, PowerShares DB Gold (DGL) may help solve a bit of the mystery. Since its January launch, accumulated assets are at $26.3 million, about where it started, and average trading volume is at a sparse 22,000 shares. Simon Constable for TheStreet.com rates it with one big yawn, and the unimpressive impact of the fund furthers that fact when gold guru investors haven’t even heard of it – therefore unable to comment.
Constable feels Deutsche Bank Commodity Services may have been so clever they outsmarted themselves. The ETF that tracks futures prices is designed to outsmart "negative yield roll" and provide tax advantages. Perhaps the funds’ main attraction "Optimum Yield" to "minimize the effects of negative roll" is just too complicated a concept. Basically Constable believes, someone interested in "optimum yield" wouldn’t be interested in DGL.
You can’t help but consider these points, but there are some big ETF providers that feel in order to be in the ETF world you need to put some stakes in the ground and let them grow at their own pace. If this strategy for investing in gold proves to outperform other gold ETFs, you can bet fund flow will increase.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.