Interview Highlights

Noah Hamman
AdvisorShares Investments

Tell us why you’re here today.
We're at the New York Stock Exchange today to ring the Closing Bell for GYEN and GEUR, our two gold and foreign currency ETFs.

Can you tell us about AdvisorShares’ ETF business?
AdvisorShares is an actively managed exchange traded fund firm. We offer 22 actively managed exchange traded funds. And what's unique about us is that we offer those products with different underlying managers who all have a previous track record and expertise in that particular strategy.

Typically ETFs are for passive investing strategies, but you offer active strategies in that ETF structure. Why do you think that works?
So our entire line-up is actively managed strategies in that ETF structure. And we think it works well, in fact, better than the mutual fund structure, including the ability to trade it on the Exchange.

We still get operational and tax efficiency, but you also get the benefit of the manager who's trying to outperform their underlying benchmark. And we've seen already managers that have started to manage their investment strategies in an active ETF structure are starting to outperform those benchmarks. There are many four- and five-star highly ranked investment managers in an active ETF structure today and we still continue to see that grow.

What are your thoughts on the future of the ETF industry?
I think it will continue to grow with somewhere between 15 to 17 trillion in assets, similar to the mutual fund space. We've already seen a lot of that money migrate to a more operationally efficient, more tax efficient structure.

For us, being in the actively managed ETF space, we’re going to see a lot of that money from actively managed mutual funds come to a much more efficient structure but still be able to get the benefits of active management.

What does it feel like to celebrate at the NYSE?
It feels great to be here at the Exchange today. It's quite an honor to be here. It’s so steeped in history, and it’s a great opportunity to reflect and be appreciative of being able to not just to be in this industry with all the great people that work here, but remember the history of how financial services has evolved over time.

Dennis Gartman
Editor and Publisher
The Gartman Letter

Tell us why you’re here today.
We’re here today to basically celebrate three years of having AdvisorShares Gartman Gold/Euro ETF (GEUR) and AdvisorShares Gartman Gold/Yen ETF (GYEN), two ETF's that trade gold but predicated in euros (in the case of GEUR) or predicated in yen (in the case of GYEN).

It’s been three years, volumes are growing up, and liquidity is getting better and better. And we’re actually beginning to see some interest in the gold market, and some interest in our ETFs.

Can you describe the strategy behind those two funds?
Well the strategy is very simple. People want to own gold but when you have a position in the gold market what you really have done – is you have a position – and you may not realize it at first, but you’re short the U.S. dollar. You’re long gold, you sold dollars against it, that's really what happened.

And so this is a way to say “I would rather, in a market where I think the euro’s going to get weaker relative to the U.S. dollar, wouldn’t it be wiser to buy gold or any other commodity.” Because this will change over time, but isn’t it wiser to use a currency that is probably devaluing relative to the U.S. dollar than to use a strengthening U.S. dollar.

So it's just a currency trade of sorts. People all have to understand – that in the foreign exchange market – all foreign exchange traders are taught to buy one thing and sell something else. Here we’re just long gold in euro terms, and long gold in yen terms.

And over the course of last five years, if you take a look at what's happened, gold is down about 22%, five years ago from today. Gold in euro terms is down 2%. Gold in yen terms is actually up 4%.

I think if you are only down 2% relative to down 22%, that's a good thing. And if you're up 4% relative to down 22%, that’s a very good thing.

How does the strategy behind those ETFs differ from other gold ETFs?
Other gold ETFs are basically a long position. You’re long gold, you exchange dollars for gold, that's really what you've done. We just simply substituted euros and yen for the dollar equation so you're just pricing it in a different currency and making a less implied bearish bet on the U.S. dollar.

What does it feel like to celebrate at the NYSE?
It's an honor. It's a privilege. Here you are at the bastion of capitalism in the world, in the most important city in the world, the capital of the world and the capital-of-capital in the world. What an honor to be here. I never thought having grown up in in Cuyahoga Falls, Ohio, that I would ever be doing this. It is a true unmitigated honor.


Listen to CEO Noah Hamman and Publisher Dennis Gartman Describe the Benefits of Active Management