WisdomTree has launched a new ETF providing capital-efficient exposure to gold through a mix of futures contracts and mining companies.

Jeremy Schwartz, Global Chief Investment Officer at WisdomTree.

The WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN US) has been listed on Cboe BZX Exchange and comes with an expense ratio of 0.45%.

According to WisdomTree, investors that are bullish on gold will often allocate to the precious metal via a blend of physical holdings or futures contracts and equities of gold miners. These positions are implemented in separate trades, each requiring its own capital.

The actively managed ETF aims to deliver both direct and indirect exposure while enhancing capital efficiency through the use of leverage and a ‘return stacking’ framework that layers gold futures on top of gold miners.

For every $100 invested in GDMN, approximately $90 is allocated to gold miners and $90 to gold futures for $180 of total gold-oriented exposure, equating to accounting leverage of 180%.

The ETF is currently invested in the front-month (February 2022) gold futures contract trading on ICE and more than 50 gold mining companies – eligible companies must derive at least 50% of their revenue from gold mining activities – weighted by market capitalization that are representative of the global gold mining sector.

Jeremy Schwartz, Global Chief Investment Officer at WisdomTree, said: “With low global interest rates and inflation at the top of many investors’ minds, we believe gold is a commodity that can provide a valuable inflation hedge – it’s not just a ‘doomsday asset’ and it has the potential to perform well in cyclical markets.

“We’re constantly finding new ways to offer investors opportunities to invest in a variety of market conditions – in a rising interest rate environment, gold miners can have a potential attractive dividend yield. Blending gold futures and gold miners can extract positive traits from both, and we believe that the ETF is built for investors seeking portfolio diversifiers to hedge macroeconomic risks.”