The Sprott Gold Miners ETF (NYSEArca: SGDM) now tracks the Solactive Gold Miners Custom Factors Index and has been reorganized into newly-created exchange-traded funds of the Sprott ETF Trust, a move that will see ALPS become sub-adviser to the fund.
The Sprott Junior Gold Miners ETF (NYSEArca: SGDJ) has also been reorganized and now tracks the Solactive Junior Gold Miners Custom Factors Index. Sprott is taking over as lead adviser for that fund as ALPS moves into a sub-adviser role.
“We are pleased with the overwhelming investor support for this Reorganization. As a result, the Sprott Gold Miners ETFs will offer investors some of the lowest fees in the category,” said John Ciampaglia, CEO of Sprott Asset Management LP, in a statement. “In addition, investors will benefit from greater integration into the Sprott organization and support from our client service, sales and marketing teams.”
The statement also indicates fees on SGDM and SGDJ have been reduced. SGDM charges 0.50% per year, or $50 on a $10,000 investment, according to issuer data. The small-cap SGDJ also charges 0.50% annually.
SGDM “emphasizes gold companies with the highest revenue growth and free cash flow yield, and the lowest long-term debt to equity ratio,” according to Sprott.
The small-cap SGDJ uses a momentum-based strategy that “emphasizes small- to mid-sized gold producers with the highest revenue growth and exploration companies with the strongest stock price momentum,” according to the issuer.
Gold has also found greater support from safe-haven demand and a more dovish outlook from major global central banks, notably the Federal Reserve’s shift toward potential interest rate cuts to combat slowing growth. Importantly, miners are proving adept at managing costs.
Gold ETFs are pushing to upside amid increased expectations of a U.S. rate cut, even as some investors locked in profits from bullion’s recent rally. Gold is believed by many investors to be inversely correlated with interest rates. Rising interest rates make bonds and other fixed-income investments more attractive, so money will flow into higher-yielding investments, such as bonds and money market funds, and out of gold, which offers no yield at all during times of higher interest rates, and back into gold ETFs.
“The Reorganization is timely, given the renewed investor interest in precious metals and gold mining stocks. The Funds will continue to utilize customized factors-based indexes that are designed to outperform passive market cap-weighted offerings,” said Ciampaglia.
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