ETF Talk: Raising Our Glasses with a Hearty ‘Skol’ to This Bullion Fund

“Always rise to an early meal, but eat your fill before a feast. If you’re hungry you have no time to talk at the table.”

– Hávamál, (Book of Viking Wisdom)

As any reader of The Deep Woods knows, this is a publication that takes a step back from pure investment dialogue and allows me to share brief personal vignettes and pearls of Renaissance Man wisdom. And while this particular segment does indeed concentrate on exchange-traded funds (ETFs), there is no reason it cannot raise a toast to history.

The Vikings were a people centered around perceived righteous battles, astute strategy and a sense of fearlessness — all in the name of Valhalla, the ultimate Viking heaven. And, while we may not be centered around entrance into Valhalla, astute strategy is indeed the name of the investment game. Keeping that in mind, the above quote can act as a reminder to investors that if we squander time waiting for the market to look the way we want it to, we may miss out on potentially fruitful investment opportunities, such as abrdn Physical Gold Shares ETF (SGOL).

With a sufficiently whetted appetite, let’s discuss SGOL as an opportunity that may deserve a hearty “Skol!”

The term Skol has several loose translations dating back to the deep-seated traditions of the Vikings and Norse people. While we now use it as a substitute for “cheers” when toasting, its more literal translation means “your bowl and my bowl.”

So, let’s toast “Skol!” to SGOL, the abrdn Physical Gold Shares ETF, as a choice on the investing menu that may very well help to fill all of our bowls.

Once again, investors are bracing themselves for Fed rate cuts — not a novel concept, but one that undoubtedly leads to market shifts and strategic investment shuffling. In times of market shift, changing headwinds and general malaise, wise investors may seek out asymmetric trading opportunities — simply meaning investments that have greater upside potential than downside loss.

One such trading opportunity can be found in gold bullion, and more specifically, SGOL, a personal favorite of mine. The goal of the fund is to provide investors with an efficient and cost-effective way of making an investment like buying gold. While not exactly the equivalent of gold, SGOL gives investors an alternative that allows a level of participation in the gold market via the securities market.

One of the perks of the fund is its grantor structuring — which is a type of structuring that is held to stricter regulatory measures than open-ended funds. Grantor trusts must meet certain requirements set forth by the Investment Company Act of 1933 and 1934. Because of this, ETFs with this structure must provide additional financial disclosures, and tax-wise, the investors of these ETFs are seen as direct shareholders of the investments within the fund. Therefore, investors are taxed directly and needn’t deal with extra tax vexations, such as the dreaded K-1 form.

Further, the fund has more than $2.7 billion in net assets and roughly $3 billion in assets under management. If this isn’t tempting enough to pique one’s interest, SGOL’s infinitesimal expense ratio of 0.17% just might.

Courtesy of stockcharts.com

Currently, SGOL is trading at $21.78, which is near its 52-week-range high of $21.83. As the chart shows, the fund saw a steep decline in October, but in a “Viking-esque” fashion, it righted itself and has continued to climb since then. Its immense liquidity, with an average of more than 3 million shares traded per day, may have something to do with the fund’s rapid rebound.

Ultimately, the abrdn Physical Gold Shares ETF (SGOL) may be just the asymmetrical trading component that interested investors are seeking. Not only is the fund’s strategy astute, but the reasons behind owning it may be as well.

So, let’s raise a toast, and cry “Skol!” to SGOL.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.