Rhind, 39, joined the World Gold Council, the company behind the SPDR Gold shares, in 2007, as exchange-traded funds began to attract investor attention. He observed record assets in 2012, followed by a change in attitude that plunged the precious metal into a bear market a year later.
In 2017, Rhind entered the market with its own store, GraniteShares Gold Trust. He is now in the midst of a war of costs with his former employer and other ETFs, which allowed his fund to earn $ 458 million worth, compared with less than $ 12 million the previous year . The price declines come at a time when the price of gold has jumped about 9.5% since August.
Once customers see the value of the product "then it does not matter whether it is provided by a large or a small company," Rhind said in a phone interview. "Big companies get used to doing things a certain way. But I think that in the next 10 years the situation will be radically different. "
Initially, GraniteShares had a fee of $ 2 for every $ 1,000 invested, which is less than the amount billed by iShares Gold Trust and approximately half that of SPDR Gold. Less than a year later, the World Gold Council and its distributor State Street Global have proposed a cheaper alternative: SPDR Gold MiniShares, which trades under the symbol GLDM.
"We launched GLDM in June 2018 in response to investor interest in a low-cost GLD supplement," said George Milling-Stanley, Head of Gold Strategy at State Street. Global Advisors, Monday. "This participation has been significant: GLDM has exceeded $ 600 million in assets under management in less than a year and has been recognized as one of the top 10 ETF launches in 2018", he said, referring to the assets under management of the fund.
Rhind's answer was to go even lower, bringing his expenses back to $ 1,749.
"The evidence shows that a reduction in fees of one basis point can represent a difference of several hundred million dollars in flows across the entire ETF sector, not just in that of gold, "said James Seyffart, an analyst at Bloomberg Intelligence. in a telephone interview. "Cost is a determining factor in return over the long term."
Even with fees representing less than half of the median rate applied by 25 US non-leveraged precious metals ETFs tracked by Bloomberg, GraniteShares, trading under the ticker symbol BAR, struggled to gain ground at beginning. Its assets, which stood at $ 2.6 million, did not reach the $ 100 million mark before June of last year.
BAR's holdings climbed nearly 39 times in the 12-month period from February 8 to 348,032.6 ounces, the largest growth among gold-backed ETFs followed by Bloomberg. Its biggest rival, SPDR Gold MiniShares, has seen its assets grow by 23 since its inception in June. SPDR Gold Shares, the largest in the industry, lost 778,000 ounces in the past year.
GLDM's assets increased by $ 578 million from $ 25 million on June 25, while BAR added $ 203 million during this period.
While BAR's assets are down from the $ 34 billion SPDR Gold Shares, Rhind's strategy is less focused on the losses of other companies than on the future of its own company. Its main objective: to have "a product capable of handling" in a crowded market.
"We just have to be as competitive as possible and continue to maintain our proposal of being the least expensive product on the market," Rhind said. "If we can continue to do that, we will continue to do it.
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