SGOL Abrdn Physical Gold Shares ETF

Global X, the New York-based ETF issuer best known for its unique global sector products, recently launched the latest addition to its lineup in what looks to be a bit of a departure from usual targets of the innovative issuer. In the release, the company looks to at least temporarily get away from its sector focus, offering up a ‘one stop shop’ for exposure across sectors and asset classes. The new Permanent ETF (PERM) will hold a variety of products, looking to give investors solid exposure across all market environments and conditions.

The new fund seeks to do this by allocating evenly among assets that can do well during four different economic conditions including; increasing growth, decreasing growth, increasing inflation, and decreasing inflation.  This is done by putting one-fourth of the fund in each of the following categories; short term government bonds, long term government bonds, precious metals, and stocks. With this focus, stocks and short-term bonds look to play opposite sides of the growth story, while the precious metals and long term bonds look to do the same for inflation trends. As a result, the fund looks to be evenly distributed and a solid choice for those with a long time horizon that are unwilling to risk a significant amount in equities (see ETFs vs. ETNs: What’s The Difference?).

Holdings of PERM

In terms of individual holdings, the fund has a nice mix of commodity ETFs, bonds, stock ETFs and individual equities, making it unique in that respect among most products in the diversified space. The top individual holding goes to ETF Securities’ Physical Gold ETF (SGOL) at nearly 20% of the total, while U.S. Treasury bonds round out most of the rest of the top ten holdings. Beyond this, two Vanguard ETFs make up decent allocations in the fund—Vanguard Small Cap ETF (VB) and Vanguard FTSE All-World (VEU)—at about 3.1% each, while a series of individual equities comprise the rest of the fund, making up between 0.53% and 0.17% of the assets in the product. This technique gives PERM a total of 87 holdings in total while charging investors 49 basis points a year in fees and rebalancing on an annual basis. Interestingly, not a single Global X fund is held in PERM’s assets, despite the company having nearly 40 other ETFs at its disposal (read Alternative Weighting Methodologies 101).

Competition

In terms of competing products, it is quite hard to find a pure match. Some could argue that a product such as the iShares S&P Target Date Retirement Income Index Fund (TGR) could be decent given its holdings of fixed income and equities. However, the fund doesn’t have any exposure to commodities and it refrains from holding individual securities in its portfolio. Beyond this fund, investors also have a few more in the diversified segment with Cambria Global Tactical ETF (GTAA) standing out among its peers as a competitor to PERM. That is because GTAA holds roughly half of its assets in bonds and has chunks of exposure that go to commodities and currencies as well (read ETFs vs. Mutual Funds).

With that being said, investors should note that the products listed above have had mixed success in terms of attracting assets. GTAA has close to $130 million while TGR has amassed less than $7.5 million in comparison. This suggests that PERM’s road to gaining assets is by no means certain, implying that the fund will have to show solid performance in order to be demanded by the investing public. Yet, given the solid and diversified methodology, the product may turn out to be a hit for those seeking diversified exposure with minimal holdings in relatively volatile equities (read Do You Need A Floating Rate Bond ETF?).

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Author is long VB.

 
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