The Ultra Gold ETF is a type of exchange-traded fund that allows investors to gain exposure to gold without physically holding the metal.
It's designed to track the price of gold, giving investors a way to profit from the metal's value.
The Ultra Gold ETF is also known as the ProShares Ultra Gold ETF, with the ticker symbol GLD.
This fund is a popular choice among investors looking to diversify their portfolios and hedge against market volatility.
Investors can buy and sell shares of the Ultra Gold ETF on major stock exchanges, such as the New York Stock Exchange.
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What is a Double Gold ETF?
A Double Gold ETF is a type of investment that tracks the value of gold and responds to movements in the same manner as other double-leveraged ETFs.
These funds have the potential for significant profits, but it's crucial to note that they also come with substantial risks.
A Double Gold ETF uses leverage, or borrowed capital, to try and double the daily return of the commodity, which can be accomplished with futures and other short-term derivatives.
The fund's goal is to deliver price movements equal to double the daily changes of the underlying gold value.
The first leveraged ETFs came to the market in 2006, after a nearly three-year review by the Securities and Exchange Commission (SEC).
The ProShares Ultra Gold ETF (UGL) is an example of a 2X leveraged gold ETF, which uses futures contracts to try and double the daily return of the commodity.
Here are some key facts about Double Gold ETFs:
- They track the value of gold and respond to movements in the same manner as other double-leveraged ETFs.
- They use leverage to try and double the daily return of the commodity.
- They have the potential for significant profits, but also come with substantial risks.
- They were first introduced to the market in 2006 after a review by the SEC.
Risks and Drawdowns
Leveraged ETFs, like the ultra gold ETF, can be problematic in declining markets. Reducing the index exposure to survive a downturn can lock in trading losses and leave the fund with a smaller asset base.
Investors who purchase leveraged ETFs can face substantial losses over time if not monitored carefully. Novice investors may want to steer clear of these investment vehicles due to their complexity and risk.
The ProShares Ultra Gold, for example, experienced a maximum drawdown of 75.93% on Dec 17, 2015, and the portfolio has not yet recovered. This is a significant risk that investors should be aware of.
Worst Drawdowns
Leveraged ETFs, such as double gold ETFs, can be volatile and result in significant losses if not managed properly.
A double gold ETF tracks the value of gold and responds to movements in the same manner as other similar double-leveraged ETFs. With a double gold ETF, the spot value of gold, or a basket of gold companies, acts as the underlying for the fund.
The maximum drawdown for the ProShares Ultra Gold was 75.93%, occurring on Dec 17, 2015. This is a staggering loss, and one that investors should be aware of before investing in a double gold ETF.
The table below displays the maximum drawdowns of the ProShares Ultra Gold, highlighting the largest reduction in portfolio value due to a series of losing trades.
These drawdowns highlight the importance of understanding the risks involved with leveraged ETFs, such as double gold ETFs, and being prepared for potential losses.
Volatility Chart
The Volatility Chart is a valuable tool for understanding the risks associated with investments.
The current ProShares Ultra Gold volatility is 8.79%, representing the average percentage change in the investment's value, either up or down over the past month.
This chart shows the rolling one-month volatility, giving us a glimpse into the potential fluctuations in the investment's value.
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Performance Metrics
ProShares Ultra Gold has a performance rank of 85, placing it among the top 15% of ETFs in terms of balancing risk and reward. This indicates that the ETF has performed well compared to others in its category.
The ETF's current year performance is 21.31%, which is a significant return. Its performance since inception is even more impressive, at 353.44%.
Here are some key performance metrics for ProShares Ultra Gold:
The ETF's Alpha 1 Year is 46.59%, indicating that it has outperformed the benchmark by a significant margin.
Performance Chart
Let's take a closer look at the performance chart, which is a valuable tool for investors. The chart shows the growth of an initial investment of $10,000 in ProShares Ultra Gold.
This investment is compared to the performance of the S&P 500 index, a widely used benchmark. The prices shown have been adjusted for splits and dividends.
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Returns by Period
Returns by Period are a crucial aspect of evaluating a fund's performance. ProShares Ultra Gold had a return of 22.31% year-to-date (YTD) and 86.59% in the last 12 months.
The fund's performance over the past 10 years is also noteworthy, with an annualized return of 11.19%. This is slightly better than the S&P 500 benchmark, which had an annualized return of 11.05%.
Here's a breakdown of the fund's returns by period:
The fund's performance is impressive, especially considering its high return over the past 12 months. Its annualized return over the past 10 years is also a testament to its consistent performance.
Risk-Adjusted Performance Indicators
UGL's overall rank of 85 puts it among the top 15% of ETFs in terms of balancing risk and reward. This is a notable achievement, especially considering the challenges of investing in the current market.
The Sharpe ratio is a key metric in evaluating an investment's risk-adjusted returns. ProShares Ultra Gold's current Sharpe ratio is 2.85, based on the past 1 year of trading data.
This value takes into account price changes and dividends, providing a comprehensive picture of the investment's historical performance. The Sharpe ratio is a valuable tool for investors looking to balance risk and reward.
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Risk-adjusted performance metrics are essential for making informed investment decisions. By comparing ProShares Ultra Gold to a chosen benchmark, such as ^GSPC, investors can gain a deeper understanding of the investment's risks and rewards.
The charts below present risk-adjusted performance metrics for ProShares Ultra Gold, offering valuable insights into the investment's historical performance. These metrics are a must-consider for investors seeking to optimize their portfolios.
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Investment Details
When investing in an ultra gold ETF, it's essential to understand the investment details.
The ultra gold ETF invests in gold bullion, with each share representing a small portion of the total gold holdings.
The fund's net asset value (NAV) is calculated daily, and the price of each share is based on the NAV.
Investors can buy or sell shares through various online brokers, making it a convenient option for those looking to invest in gold.
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Investment Objective
The investment objective of this fund is quite straightforward. It aims to track the performance of the Bloomberg Gold SubindexSM, aiming to return two times (2x) the daily results before fees and expenses.
The fund will invest in a variety of financial instruments, including swap agreements, futures contracts, forward contracts, and option contracts, to achieve its objective. These investments may change daily at the discretion of the Sponsor.
The fund will not invest directly in any commodity, which means it will not hold physical gold or other precious metals. It will instead use financial instruments to gain exposure to the gold market.
The types of financial instruments in which the fund invests may vary, but they can include bond, equity, and convertible securities.
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Expense Ratio
The expense ratio is a crucial factor to consider when evaluating an investment. UGL has a high expense ratio of 0.95%, indicating higher-than-average management fees.
This means that a significant portion of your investment returns will be eaten away by management costs.
Top 10 Holdings
As we dive into the investment details, let's take a closer look at the top holdings. The largest holding is Gold Future Apr 25, making up a significant 53.7671% of the portfolio.
This holding is comprised of 1,444 shares, valued at a staggering $426,860,840. Notably, the number of shares has decreased by 11 since the last update.
The second-largest holding is Bloomberg Gold Subindex Swap - Citibank Na, accounting for 19.5050% of the portfolio. With 553,738 shares, this holding is valued at $154,851,592.
Rounding out the top three is Bloomberg Gold Subindex Swap - Ubs Ag, making up 16.6561% of the portfolio. This holding consists of 472,860 shares, valued at $132,234,143.
Here's a breakdown of the top 3 holdings:
Comparison and Analysis
Ultra Gold ETFs are often compared to other gold ETFs on the market, but one key difference is that they don't hold physical gold, instead using derivatives to track the gold price.
The Ultra Gold ETF's use of derivatives means it can be more volatile than other gold ETFs, with a tracking error of up to 10%.
Ultra Gold ETFs typically have lower fees compared to other gold ETFs, with some charging as little as 0.20% per year.
The Ultra Gold ETF's structure allows for more flexibility in terms of investment options, with some offering a range of underlying assets, including gold, silver, and platinum.
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Example and Data
Ultra Gold ETFs are a type of exchange-traded fund that tracks the price of gold. They're a popular investment option for those looking to diversify their portfolio and hedge against inflation.
The Ultra Gold ETF, specifically the ETG (Gold Trust) ETF, has a net asset value (NAV) of around $1,000 per share, which is significantly lower than the spot price of gold. This discrepancy is due to the fund's structure and fees.
Ultra Gold ETFs are designed to track the spot price of gold, and the ETG ETF has a 1:1 ratio with the spot price, meaning that for every share of the ETF, you'll get a corresponding amount of gold. This makes it a convenient way to invest in gold without having to physically store it.
The ETG ETF has a management fee of 0.40%, which is relatively low compared to other investment options.
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Frequently Asked Questions
Is GLD backed by real gold?
No, GLD shares represent a claim on gold, not physical ownership of it. The fund holds gold and/or cash, but shareholders are not guaranteed to receive physical gold in exchange for their shares.
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