ETF Prime: Islam on Spot Bitcoin ETFs, Uranium, & More

To begin, Geraci and Islam focused on GLD’s 20th anniversary. Geraci noted that the fund was the first physical gold ETF to come to market. It has roughly $75 billion in assets under management as of now. He then asked Islam if she had any particular thoughts on it. 

Islsm cited GLD as a great example for why ETFs can be highly useful investment instruments. In particular, she noted that it can be somewhat difficult for investors to add physical gold to their portfolio. The ETF, however, offers a very straightforward means to do so. As such, many investors prefer it as their ideal vehicle for gaining direct gold exposure. 

“It’s interesting, because the demand for gold ETFs is actually so significant in the gold market that it actually affects the price of gold,” Islam added. 

Spinning off from gold, Geraci moved on to discuss bitcoin. In particular, he noted that spot bitcoin ETFs already amount to over $100 billion in assets under management in less than eleven months. Geraci went on to announce that he expects spot bitcoin ETFs to eventually outpace physical gold ETFs in assets. 

Islam noted that much of this jump in assets can be attributed to the surge in bitcoin price. She added that bitcoin’s price recently got close to the $100k threshold, despite being down closer to $60k earlier this month. 

Back on the comparison between bitcoin and gold, Geraci asked Islam if she believes physical gold ETFs and spot bitcoin ETFs will eventually reach a point where they’re in competition with one another. Alternatively, he asked if she believes that those funds will be viewed as different enough asset classes. 

Islam fell on the side that bitcoin and gold are different enough asset classes. She did concede, however, that they both could be perceived as inflation hedges. Additionally, she noted that both gold and bitcoin can be considered “emotional investments,” with bitcoin being more so than gold. 

“People who like bitcoin, they usually really like bitcoin. They like talking about it. It’s like a lifestyle,” Islam noted. “Some of these investors, I don’t know if they’re ever going to sell their bitcoin. I think they might just hold it infinitely.”

Switching gears, Geraci assessed that there has been a resurgence of interest in uranium and uranium ETFs lately. He then asked Islam why she believes interest is growing for this commodity in particular. 

Islam attributed the piqued interest in uranium to a few factors. First, when focus on the energy transition rose a few years ago, more energy producers began looking towards nuclear energy. Uranium benefitted from this.

The focus on uranium magnified as AI began to get more popular, according to Islam. Given how much energy is required to run these AI models and infrastructures, more focus is being drawn on methods to keep artificial intelligence energized. 

“There’s going to be a huge need for infrastructure and energy, and we’re hearing a lot about how clean energy could power the AI expansion,” Islam added. 

With interest in energy infrastructure kicking up, Islam pointed out that a number of big tech companies have started investing in more nuclear energy. In particular, she pointed to a partnership between Microsoft and Constellation Energy to revive a nuclear power plant. 

To close out this week’s episode, Geraci brought on Katie Stockton, CMT, founder and managing partner of Fairlead Strategies. Welcoming Stockton to the podcast, Geraci asked her to break down the nuts and bolts of the Fairlead Tactical Sector ETF (TACK ). 

Stockton explained that TACK uses a sector rotation strategy to shift exposure to eight equally weighed buckets of sector SPDR ETFs. As such, this means that there are usually three equity sector ETFs that the fund is not invested in at a given time. 

To choose which sectors to invest in, Stockton explained that TACK’s portfolio management searches for a number of valuable factors. These factors include long-term momentum, relative strength, and overbought and oversold input. 

“We’ve had this full equity position for several months, and it’s been the right way to be positioned,” added Stockton. “We really saw great performance, not just in asset, but in relative terms, especially in Q3.”

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