Gold Mining Monthly Report | February

Gold Mining ETF Monthly Report: Key Highlights

• FED continued to communicate about the need to start raising interest rates, which of course, had significant effects on a market that has been dependent on stimuli in the form of unprecedented low-interest rates and asset purchases. In recent years, the assets that have become sharply overvalued are very vulnerable and have a significant fall height. [1]

• It is also clear that computers with algorithms that act on "news" and not facts make the pendulum swing faster and stronger in today's world. Here, effects from broad market-weighted indices and thus ETFs that now have very large positions in the companies that have been most overvalued can also have significant consequences if these companies lose a lot of value in the future. [2]

• It was a long time ago that we saw so much geopolitical uncertainty and that people also talk about war. After the debacle in Afghanistan, the world power USA now has problems with both Russia/Ukraine and China/Taiwan. Europe stays away the most and does everything to bring about peaceful solutions.

• There have been record purchases of gold during the month, which may indicate that more investors are starting to position themselves for the coming market climate. [3]

Macro Outlook

• FED risks a stock market crash if they raise interest rates too quickly or a run-away inflation if they do not start with the increases. Precious metals are historically weak just before the interest rate hike cycle begins, but all the stronger once the hikes have begun. So it's starting to be the day for the FED to act and stop talking. [4]

• After the declines in precious metals at the end of the month, the positioning on COMEX is very bullish. Commercials simply do not come out of their last short positions, and the question now is whether they will dare to go short to limit the next rise or whether they let prices rise freely. 

• Precious metals such as gold and silver are now extremely cheap in relation to the S&P 500. At the same time, the metals' mining companies are historically cheap in relation to the metals themselves. This provides a significant "risk/reward" opportunity for a long-term portfolio or a pure "contrarian" investor. 

Gold Mining ETF Performance (As of 31.01.22)

Performance before inception is based on back-tested data. Backtesting is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product.
Source: Bloomberg / HANetf. Data as of 31/01/2022. Please note that all performance figures show net data.

Composition / Holdings

In the ordinary rebalance, the new composition will be implemented over a period starting on 04.01.2022 (cob) and ending on 07.01.2022 (cob). The new composition and target weights will be fully reflected in the index open 10.01.2022:

• New constitutes (green and bold)
• Deletions (red and drawn out)
• Constitutes with over 85% participation from all 28 quarterly rebalances since the start of the index (dark)
• ESGO, ESG Risk Score – average: 25,39 / highest: 32,28 (Endeavour)
• Universe, ESG Risk Score – average: 38,10 / highest: 65,20 (as of ESGO inception July 2021)
• Index value as of 31.01.2022: 2089,83 / +108,98% (index start date 27.03.2015, at 1000)

Source of all data: AuAg Funds / Bloomberg / Sustainalytics / Solactive. Data as of 31.01.2022.

Weighting & Rebalancing

On each selection day, each index component is assigned an equal weight. The index is rebalanced quarterly with a four-day Asian rebalancing.

SFDR & ESG Risk Rating Methodology

The ETF is classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR). The ESG Risk data is provided by Sustainalytics and is active, external, and independent.

The ESG Risk Ratings measure the degree to which a company’s economic value is at risk driven by ESG factors or, more technically speaking, the magnitude of a company’s unmanaged ESG risks. To calculate the ESG risk rating of each company, the Data Provider considers the corporate governance and material ESG issues.

Corporate governance is a foundational element in the ESG Risk Ratings and reflects our conviction that poor Corporate Governance poses material risks for companies. Corporate governance is based on six pillars and 15 indicator weights. Material ESG Issues (MEIs) contribute to the ESG risk rating. A company can have up to ten pre-selected, industry-specific MEIs plus any additional company-specific issues.

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