Evolve launches active gold miners ETF

Sep 30th, 2020 | By | Category: Equities

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Evolve Funds has introduced a new ETF in Canada’s NEO Exchange providing actively managed exposure to global gold mining stocks.

Evolve launches active gold miners ETF

The fund provides actively managed exposure to the global gold mining sector.

The Evolve Gold Miners Fund (GLC CN) comes with a management fee of 0.70%.

It has been created through the conversion of the Gold Miners Split Corp, a closed-end fund, into ETF shares, and the adoption of a new name and strategy.

The eligible investment universe includes all companies that comprise the S&P/TSX Global Gold Index, the NYSE Arca Gold Miners Index, and the MVIS Global Junior Gold Miners Index.

At least 90% of total assets of the fund will be invested in companies that have a market capitalization of no less than $350 million, and at least 60% will be invested in larger-cap gold miners, companies that have market capitalizations greater than $1 billion.

The fund’s managers, led by Elliot Johnson, Chief Investment Officer, Evolve Funds Group, will select securities based on valuation metrics, stock liquidity, share price volatility, dividend yield and dividend growth, options market conditions, and relevant sector news.

Leverage may be used, up to a maximum of 50% of the portfolio value. Exposure to any single stock will be limited to 8%, and the fund will generally seek to hedge currency risk relative to the Canadian dollar.

The fund’s managers intend to engage in discretionary covered call option strategies on 15% of the portfolio in normal market conditions in a bid to enhance income and reduce portfolio volatility. The level of covered call option writing may vary based on market volatility. The fund targets a yield of 7.0%. Distributions are sent to investors on a quarterly basis.

The fund currently has 23 holdings with major positions including Newmont (6.27%), Barrick Gold (5.88%), Franco-Nevada (5.80%), Wheaton Precious Metals (5.71%), and Agnico Eagle Mines (5.31%). The major country contributors are Canadian miners with 52.06%, US miners with 12.78%, and South African miners with 10.16%.

Elliot Johnson, lead fund manager and Chief Investment Officer at Evolve ETFs, commented, “As gold prices strengthen on the back of the global pandemic, we believe there remains a long-term investment opportunity in the gold mining sector. Given the uncertainty in the post-pandemic world, now might be the time for investors to consider gold mining equities. We launched the Evolve Gold Miners Fund to provide investors with access to an undervalued growth sector that historically moves in the opposite direction to the broad equity markets.”

Evolve also offers an ETF targeting the broader global mining sector. The Evolve Global Materials & Mining Enhanced Yield Index ETF (BASE CN), which launched in June 2019, tracks the Solactive Materials & Mining Index while using an active overlay to enhance income through covered calls on up to a third of the portfolio. The fund houses $20 million in AUM and comes with a management expense ratio (MER) of 0.75%.

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