US Global Investors launches precious metal miners ETF with smart beta overlay

Sep 30th, 2017 | By | Category: Equities

A new smart beta ETF providing exposure to precious metal mining companies has been launched on the Toronto Stock Exchange. The US Global GO GOLD and Precious Metal Miners ETF CAD (TSX: GOGO), a collaborative launch between US Global Investors and Galileo Global Equity Advisors, Texas-based and Toronto-based investment advisors respectively, follows a US version of the fund which was launched in June of this year (NYSE Arca: GOAUX).

US Global Investors launches smart beta precious metal miners ETF

The ETF screens mining stocks for value, profitability, operating efficiency, and healthy balance sheets.

Frank Holmes, CEO and CIO, US Global Investors, commented: “With the combined efforts of the Galileo team, US Global Investors is pleased to bring this product to Canadian investors. Our years of expertise in the gold mining industry have given us a strong platform to work from, and we believe that royalty companies offer a unique opportunity which we are excited to share.”

The fund tracks the US Global GO GOLD and Precious Metal Miners Index, which captures the performance of companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means. Eligible companies must earn over 50% of their revenues from the production of precious metals.

Royalty companies serve as special financiers that provide upfront capital to help fund producers’ exploration and production projects. In return, they receive royalties on whatever is produced or rights to a “stream.” A stream is an agreed-upon amount of gold, silver or other precious metal at a fixed, lower-than-market price.

Rather than focusing solely on mining stocks with large market caps, GOGO seeks high-quality, well-managed producers with a proven track record of profitability, even when precious metals prices are down.

The selection universe for the index consists of common stocks listed on well-developed exchanges across the globe. The index uses a smart factor, rules-based model to identify companies with attractive valuations, profitability, balance sheets and operating efficiency, as well as attractive portfolios of active mines. Companies that rely primarily on debt to finance their business are eliminated from the index.

The index is rebalanced and reconstituted quarterly. The ETF has an expense ratio of 0.60%.

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