Gold is the best-performing major asset this year, enjoying a comfortable lead over its nearest competitors. Obviously, that’s good news for holders of physical gold as well as investors engaged with related ETFs.
As proven by the WisdomTree Efficient Gold Plus Equity Strategy Fund (GDE ) — a combination gold futures/domestic large-cap stocks fund — not all gold ETFs are created equal. In bygone eras of gold ETF investing, market participants seeking exposure to both spot gold prices and equities had to own gold or a gold ETF and individual stocks or broad market funds.
GDE’s unique approach to investing in the yellow metal has rewarded investors. This has been highlighted by a gain of more than 36% over the past 12 months. That, among other reasons, is why the ETF is garnering kudos of its own. Over the past year and three years, GDE rose to the top spot in the Morningstar U.S. Large Blend category. That’s an impressive feat when considering that group includes more than 1,000 funds.
GDE Deserves the Adulation
As Christopher Gannatti, WisdomTree’s global head of research, points out, one of the reasons GDE has been successful is that it keeps things simple. There are myriad examples of multi-asset funds being overly complex, but that’s not true of GDE.
“The equity sleeve is straightforward: a market capitalization-weighted allocation to the 500 largest U.S. [stocks. That’s] a segment that has led the equity markets, with mega-cap resilience dominating the performance tables,” he noted Gannatti. “But layered onto this equity core is the innovation. GDE overlays gold futures exposure in a capital-efficient structure, using only $10 of collateral for every $90 in gold futures while maintaining full equity exposure.”
Importantly, GDE is doing its job. The ETF debuted in March 2022. The subsequent period has been overtly favorably to the precious metal. The same is mostly true for domestic large-cap stocks, though there were some hiccups along the way.
That is to say GDE has done its job since inception, responding to rallies by both gold and large-cap equities. Delivering on promises is something any business and its products need to accomplish. GDE is doing just that. And the ETF is achieving that objective while helping investors avoid the burden of deciding between gold and stocks.
No Need to Give Up Equity Exposure
“GDE’s structure offers a solution that reframes the conversation: It doesn’t require an investor to give up equity exposure to gain access to gold. Instead, through capital-efficient layering of gold futures atop a traditional equity core, GDE enables simultaneous participation in both trends,” concluded Gannatti.
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