U.S. Global Investors rolled out an intelligent, smart beta exchange traded fund on Wednesday that has a focus on the quality gold miners segment.
As part of the launch, U.S. Global Investors CEO and Chief Investment Officer Frank Holmes will ring the bell at the New York Stock Exchange on Thursday afternoon to help usher in U.S. Global GO GOLD and Precious Metal Miners ETF (NYSEArca: GOAU).
Unlike the other gold metal miners-related ETFs on the market, GOAU is a smart beta offering that tracks a specialized or rules-based index to help hone in on quality players in the gold mining space.
“This ETF is an intelligent product,” Holmes told ETF Trends. “We’ve been working on the methodology for the past three years. It uses a smart, quant-factor approach to scoop up the best names in the gold space. You know, so many other ETFs do a great job of aggregating all the public companies in the gold space – but GOAU is different because it really digs down to find the best quality stocks.”
Specifically, GOAU tries to reflect the performance of the U.S. Global Go Gold and Precious Metal Miners Index, which is comprised of U.S. and international companies that earned at least 50% of their aggregate revenue from precious metals and categorizes components into four “tiers” of precious metals companies based on certain fundamental factors.
According to the prospectus, each tier will be populated with those having revenue per employee that is greater than the median for companies whose revenue per employees is in the top 20th percentile of the broader universe. Additionally, the screen also factors in operating cash flow per employee and gross margin.
“One of the unique factors we do look at is revenue per employee, which yields royalty and streaming companies,” Holmes said. “I like to call these companies the ‘smart money’ of the metals and mining space. So names like Franco-Nevada, Wheaton Precious Metals and Royal Gold are weighted higher. And what’s interesting to note is royalty and streaming names not only gives investors exposure to the space, but does so with potentially less risk.”