10-Q: Franklin Responsibly Sourced Gold ETF Sees Net Asset Value Surge in Q2 2024 Amid Rising Gold Prices

The Franklin Responsibly Sourced Gold ETF (FGDL) reported an increase in net asset value (NAV) during the second quarter of 2024, driven by rising gold prices and creation of new shares.

Summary

• Franklin Templeton Holdings Trust, sponsoring the Franklin Responsibly Sourced Gold ETF (FGDL), released its Form 10-Q for the quarter ended September 30, 2024.
• The ETF's investment objective is to mirror the performance of gold bullion prices, net of expenses.
• As of September 30, 2024, the fund held 32,699.485 ounces of gold, valued at $85,998,011, compared to 28,048.958 ounces valued at $62,110,210 as of March 31, 2024.
• The NAV per share increased from $31.12 at the beginning of the quarter to $35.10 at the end of the quarter.
• During the quarter, 250,000 shares were issued in exchange for 3,336.631 ounces of gold.
• The net increase in net assets resulting from operations for the quarter was $8,997,236.
• The fund's only recurring expense is the sponsor's fee, which is 0.15% of the NAV.
• The fund seeks to hold only responsibly sourced gold, defined as London Good Delivery gold bullion bars refined on or after January 1, 2012, in accordance with LBMA Responsible Gold Guidance.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the increase in NAV and the fund's focus on responsibly sourced gold. However, the dependence on gold prices and market volatility temper the overall sentiment.

Positives

• The fund experienced a substantial increase in net asset value, driven by the rising price of gold.
• The fund's focus on responsibly sourced gold may appeal to environmentally and socially conscious investors.
• The fund's total return at net asset value was 12.79% for the three months ended September 30, 2024.
• The fund had a net increase in assets from operations of $8,997,236 for the quarter.

Negatives

• The fund's performance is entirely dependent on the price of gold, making it susceptible to market volatility.
• The fund's expenses, although low at 0.15%, will reduce overall returns.
• The fund's NAV decreased by (2.18)% from $1,912.25 per fine ounce at June 30, 2023 to $1,870.50 per fine ounce at period end September 30, 2023.

Risks

• The price of gold is subject to various factors, including global supply and demand, inflation expectations, currency exchange rates, interest rate volatility, and political/economic events.
• There is no guarantee that gold will maintain its long-term value or purchasing power.
• A decline in the price of gold would proportionally decrease the value of the fund's shares.
• The fund is not actively managed, so it cannot adapt to changing market conditions beyond the fluctuations in gold prices.

Future Outlook

The report includes forward-looking statements regarding future gold prices, market conditions, and the fund's operations, but cautions that actual results may differ materially due to various risks and uncertainties.

Industry Context

This announcement reflects the performance of a gold-backed ETF, which is directly tied to the price of gold. The performance is influenced by macroeconomic factors affecting the gold market, such as inflation, interest rates, and geopolitical events. Competitors include other gold ETFs such as GLD (SPDR Gold Trust) and IAU (iShares Gold Trust). FGDL differentiates itself by focusing on responsibly sourced gold.

Comparison to Industry Standards

• The Franklin Responsibly Sourced Gold ETF (FGDL) competes with other gold-backed ETFs like SPDR Gold Trust (GLD) and iShares Gold Trust (IAU).
• GLD and IAU are larger in terms of assets under management and trading volume, making them more liquid.
• FGDL's focus on responsibly sourced gold differentiates it from some competitors, potentially attracting socially conscious investors.
• The sponsor fee of 0.15% is competitive with other gold ETFs.
• For example, GLD has an expense ratio of 0.40% and IAU has an expense ratio of 0.25%.

Related Party Transactions

• The Fund pays the Sponsor a unitary fee for services performed pursuant to the Sponsor Agreement.
• The Marketing Agent is an affiliate of the Sponsor.
• Franklin Resources, Inc. (FRI) is the ultimate parent company of the Sponsor and the Marketing Agent.

Stakeholder Impact

• Shareholders benefit from the increase in NAV due to rising gold prices.
• The focus on responsibly sourced gold may enhance the fund's reputation and attract socially conscious investors.
• Authorized Participants are involved in the creation and redemption of shares in exchange for gold.

Key Dates

Keywords

gold, ETF, Franklin Templeton, responsibly sourced, bullion, investment, FGDL, NAV