Soros Fund Management, the investment firm that manages the wealth of billionaire investor George Soros, eliminated its stake in the SPDR Gold Shares (NYSEArca: GLD) during the second quarter, according to regulatory filings.
However, Soros Fund Management did add positions in well-known exchange traded funds, including the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China-related ETF trading in the U.S. Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.
In addition to FXI, Soros Fund Management added a new position in the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ).
Soros Fund Management “sold its position in SPDR Gold Shares worth $30.4 million as of June 30, according to a regulatory filing Monday. As of the same date, it increased its exposure to Japan, China and emerging markets exchange-traded funds. The firm added positions in WisdomTree Japan Hedged Equity Fund and iShares China Large-Cap ETF worth $34.1 million and $24.1 million, respectively,” according to Bloomberg.[related_stories]
Bolstering the allure of currency hedged ETFs, such as DXJ, market observers argue that the greenback will maintain its momentum as more traders anticipate the Federal Reserve to hike interest rates 25 basis points in December, especially after minutes from the Fed’s September policy meeting released on Wednesday revealed many members leaning toward higher borrowing costs on improving U.S. economic conditions.
Soros Fund Management also added a stake in the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), the second-largest emerging markets ETF, during the second quarter.
“Soros moved out of gold after the metal rose 25 percent in the first half. His bearish statements about global economic events earlier this year signaled that investors might have cause to find safe havens,” according to Bloomberg.
Emerging markets have recently picked up momentum after years of underperforming developed markets, and the global segment remains relatively attractive. EEM is trading at a 12.9 P/E and a 1.4 P/B. In contrast, the S&P 500 Index is showing a 19.1 P/E and a 2.7 P/B.
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SPDR Gold Shares (NYSEArca: GLD)
Tom Lydon’s clients own shares of EEM and GLD.