Page 39 - Forbes Magazine-September 30, 2018

Investing FUNDS

The first two products were diversified com- Mini Shares Trust, with a fee of 0.18%, a hair below
modity pools: Bloomberg Commodity Broad Strat- Rhind’s 0.2%. SOUND
egy No K-1 and S&P GSCI Commodity Broad Rhind says there’s room for both of the cheap STRATEGIES
Strategy No K-1. They both undercut the estab- funds, since they serve slightly different clienteles.
lished players in commodity funds. Their expense His fund, like the older SPDR fund, has shares
ratios, respectively 0.25% and 0.35%, are less than pegged to the value of a tenth of a troy ounce of the
half the fee on the $2.4 billion Invesco DB Com- metal. The SPDR Mini, like the iShares Gold Trust
modity Index Tracking Fund. (expense: 0.25%), tracks a hundredth of an ounce
Next item on the agenda was a gold bullion fund and is attractive to small-stakes buyers. For an over-
aimed at stealing traffic from Rhind’s previous em- night speculation, the high liquidity of SPDR Gold
ployer. The SPDR fund charges investors 0.4% a makes it the cost winner. But for a one-year hold-
ing, Rhind’s prod-
HOW TO PLAY IT uct is the best buy IT’S COMPLICATED
A COMBINATION OF BID/ASK SPREADS AND EXPENSE RATIOS MAKES (see table). Evermore Global’s
GRANITESHARES GOLD THE CHEAPEST BUY FOR A ONE-YEAR HOLDING OF If inflation David Marcus hunts for
BULLION. BUT DAY TRADERS WOULD DO BETTER WITH SPDR GOLD AND VERY keeps getting breakups, restructurings
LONG-TERM HOLDERS WITH SPDR GOLD MINI. worse, Rhind could and spinoffs whose
SHARES SPREAD EXPENSE RATIO do well with either complexities yield
TICKER FUND NEEDED (CENTS) (BASIS POINTS) COST 1 bargains. Running
gold or commodi-
Evermore’s $684 million
ties. If it doesn’t, he
BAR GRANITESHARES GOLD TRUST 1,007 2 20 $260 (assets) Global Value
has other irons in
GLDM SPDR GOLD MINISHARES 10,059 1 18 317 Fund, he traverses the
the fire.
IAU ISHARES GOLD TRUST 10,480 1 25 405 world for misunderstood
The prospective or underperforming
SGOL ETFS PHYSICAL SWISS GOLD 1,041 2 39 489
bitcoin ETF would companies where positive
GLD SPDR GOLD SHARES 1,062 1 40 491
face competition reorganization is afoot. His
1 FOR A 100-OUNCE POSITION HELD FOR ONE YEAR. EXCLUDES BROKERAGE COMMISSION. fund has returned 10.9%
SOURCES: MORNINGSTAR; BLOOMBERG. from other small over the last five years.
firms but probably
Two top picks:
year, or $480 for someone seeking the equivalent of none from Vanguard. A trillion-dollar asset man-
100 ounces of gold. GraniteShares Gold Trust cuts ager won’t risk its reputation on something as vol- DOWDUPONT
A year ago, Dow Chemical
that fee in half. atile as cryptocurrencies, Rhind says: “It’s the circle tied up with DuPont. “This
After a slow start, Rhind’s firm caught on this of life. A company gets big, and its priorities change. is a new phenomenon,
spring and is up to a third of a billion dollars in as- It’s managing brands and managing risks.” ‘merge to break up,’ ”
sets. Profit? None as yet. He’s running this busi- GraniteShares’ Hips U.S. High Income ETF Marcus says of CEO
ness the way Jeff Bezos ran Amazon in its first five has only $8 million but looks like something that Ed Breen’s plan to split
years: volume first, profit later. If he can get $1 bil- will appeal to retirees. It’s a mash-up of high-pay- the combined firm into
three public companies.
lion under the roof by the end of next year, he says, out pipeline partnerships with real estate invest- Recently trading near $70
he’ll have an enterprise worth perhaps $100 million ment trusts and business development companies. a share, the pieces, Marcus
to an acquirer. The blend enables the fund to yield 6% while side- believes, are worth at least
This is not going to be easy. The ETF industry’s stepping a corporate tax that afflicts pure-pipeline $100; he speculates Breen
asset growth will sooner or later taper off, and the ETFs. Vanguard has nothing like it. might then chop DuPont
big players are clawing at each other with fee cuts. As for Rhind’s wild bet on the shares of ETF Se- into multiple parts as well.
You can get a stock index ETF now for 0.03% a year. curities: After years of hesitation, Tuckwell decid- EXOR
That kind of pricing would doom a $1 billion outfit. ed to sell the firm off in pieces for a combined price This Italian conglomerate
(“a compounding
Rhind’s answer: “That’s been happening for near $650 million. Rhind’s undisclosed portion will machine”) owns reinsurer
25 years. And it’s only a phenomenon in the most probably turn into cash by the end of the year.
PartnerRe and soccer
commoditized, heavily trafficked benchmarks. In Rhind isn’t saying what his plans are for the power Juventus, plus large
fact, the market is segmented, with lots of different windfall, but it would be out of character for him to stakes in the Economist,
products and lots of different buying behavior.” leave it safely in the bank. With more capital, Gran- Ferrari, Fiat and CNH.
Still, SPDR Gold, a joint venture of State Street iteShares could get to $1 billion or even $10 bil- Marcus sees value,
and the mining industry, isn’t about to let an up- lion in assets all the faster. What did that fellow Brit especially for Fiat, which is
start siphon away all the price-sensitive custom- Kipling say? “Make one heap of all your winnings spinning off its auto-parts
business, Magneti Marelli.
ers. While leaving in place the high price on its and risk it on one turn of pitch-and-toss.” That’s In 2017 Exor’s net asset
big fund, in June the sponsor opened SPDR Gold what they do in Aberdeen. value rose 57%. SOUND STRATEGIES BY ANTOINE GARA

FINAL THOUGHT
“You may think I’m small, but I have a universe inside my mind.” —YOKO ONO

62 | FORBES SEPTEMBER 30, 2018