Will Rhind, a founding member of iShares and former CEO of the World Gold Council, explains how his new company GraniteShares is helping ETF investors.
Will Rhind, founder and CEO of GraniteShares, knows a thing or two about exchange-traded funds (ETFs).
He began his career in the ETF space 16 years ago as a founding member of iShares, and went on to work at ETF Securities. He also served as CEO of the World Gold Council, where he ran SPDR Gold Shares (ARCA:GLD), the largest physically backed gold ETF in the world.
Rhind identified two major issues with commodities ETFs during that time, and recently he set out to solve them. He founded ETF issuer GraniteShares last year, and since then the firm has launched three ETFs, two of which focus on commodities and one of which is specific to gold.
“Being involved in ETFs for a long time, and specifically being involved in commodities, one of the things that I’d noticed [was that] there were two fundamental problems,” he explained to the Investing News Network via phone. “[There were] very high management fees relative to what people would pay for an equity … and [there was] imperfect or improper packaging for the fund structure.”
GraniteShares’ current commodities offerings are the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (ARCA:COMB) and the GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF (ARCA:COMG). The former is the lowest-priced commodities ETF on the market, and the latter offers exposure to the commodities futures market.
The firm’s third ETF is the GraniteShares Gold Trust (ARCA:BAR). “That one is just physical gold, it tracks the spot price of gold, but at the lowest cost in the word currently,” said Rhind.
So far the reaction from investors has been positive. “The reaction has been really good … who doesn’t like lower-cost products,” he commented, adding, “a lot of people have applauded us for innovating within the space and bringing out a better fund at a lower price. We’re really trying to disrupt the scene vs. some of the legacy players that are very expensive.”
Rhind continued, “some people now have said, ‘we can now include commodities in our portfolio because there’s a structure and a price point that makes sense to do that.'”
Investor interest in GraniteShares’ products also reflects rising interest in both ETFS and the commodities space. According to Rhind, statistics show that ETFs “have never been more popular and continue to get more popular by the day. Definitely the ETF trend is still continuing at a very rapid pace.”
Meanwhile, commodities are falling back into favor once again. “We launched the business with an initial focus on commodities because we believed that that the cycle for commodities was turning, and now is a good time to invest in commodities again,” explained Rhind. “If prices stay the same as they are now until the end of the year, we’ll have two back-to-back positive years for commodities for the first time since 2011. It’s starting to look a lot better in terms of the outlook for commodities.”
In his opinion, that recovery has been driven by two main factors: a weaker US dollar and stronger oil prices. “From the beginning of this year, you started to see a decline in the US dollar … which is good for commodities. You’ve [also] had an increase in oil prices … [OPEC’s] output cuts are really starting to take effect, and global demand is increasing. So you’re seeing a positive picture across the board.”
When asked where he sees gold heading specifically, Rhind said he’s optimistic about the yellow metal’s prospects. “I think what people are starting to think about more with gold is the probability of a major stock market correction, and therefore the need to have some kind of protection or ballast in their portfolio,” he commented. Other prominent market watchers have recently expressed similar ideas.
Rhind added, “because gold is uncorrelated to stocks or bonds, a lot of people are starting to think about that, and are thinking about maybe adding some gold to their portfolio … if there is a market correction, you would expect gold prices to do well.”
In terms of what’s next for GraniteShares, Rhind couldn’t provide specifics. However, he did say the company hopes to launch another couple of ETFs by the end of 2017. “Hopefully we can do that,” he said. “And [investors should] expect to see some more disruptive, innovative ideas from us.”
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.