It’s been a golden year for gold ETFs, but one fund that focuses on gold and precious metals miners has surged ahead of its competitors.
Year-to-date, the US Global Go Gold and Precious Metal Miners ETF (GOAU) is up 51.05%. To put things in perspective, the VanEck Vectors Gold Miners ETF (GDX) is up 40.54% YTD while the VanEck Vectors Junior Gold Min ETF (GDXJ) is up 36.33% YTD, according to XTF.com data.
GOAU provides investors access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means.
Speaking to ETF Trends, US Global Investors’ CEO and Chief Investment Officer, Frank Holmes, said before launching GOAU in June 2017, about 8,000 hours were spent analyzing different methodologies for the fund, looking at a hundred different factors, one by one.
“We came up with a set of factors that allowed us to adapt an adjustable up and down cycles in gold,” Holmes said. “And it outperformed the GDXJ 92% of the time in rolling 12-month periods.” That testing gave US Global all the core confidence to know the success GOAU would have, leading up to its launch.
With gold in such a strong position as of late, the strong year-to-date position this fund has is certainly worth a closer look.
“This is the ultimate,” Holmes explains, as one of GOAU’s advantages is how it recalibrates after every quarter. This makes it an actively managed fund seeing a lot of success currently.
With 30% of the holdings in royalty companies that have a “superior business model” as Holmes puts it, the rest of the stocks are recalibrated on five factors US Global has found to attract quantamental institutional investor money, and quant funds.
GOAU is up 51.05% YTD, ahead of GDX that’s up 40.54% and GDXJ that’s up 36.33%.
Search For Golden Companies
Holmes said GOAU looks to gold mining companies that can deliver the highest free cash flow yield.
“We’re looking for those companies where revenue last quarter is above four quarters,” Holmes explains. “There’s a momentum in the top line, and the IBIDA for last quarter is above the average for four quarters.”
Having those two factors line up is excellent, and it means GOAU will want to be involved to go along with that financial momentum.
“What has shown is that year-to-date, over the past twelve months, is it’s performed exceptionally well,” Holmes notes. He adds that for the gold mining industry, this ETF looks for only “high grade” companies out of the approximately 100 gold and silver producers in the world.
GOAU currently holds 28 companies and comes with a 0.60% expense ratio.
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