10-Q/A: Franklin Responsibly Sourced Gold ETF Reports Q2 2023 Results: NAV Decreases Amid Gold Price Volatility

Franklin Responsibly Sourced Gold ETF's NAV per share decreased in Q2 2023 due to a decline in gold prices, despite share creation and redemption activities.

Summary

• Franklin Responsibly Sourced Gold ETF (FGDL) reported its financial results for the quarter ended June 30, 2023.
• The fund's investment objective is to reflect the performance of the price of gold bullion, less expenses, by holding responsibly sourced gold.
• The NAV per share decreased from $26.48 at the beginning of the quarter to $25.57 at the end of the quarter.
• This decrease was primarily due to a (3.4)% decline in the price of gold, from $1,979.70 to $1,912.25 per fine ounce.
• During the quarter, 100,000 shares were created in exchange for 1,337.286 ounces of gold, and 750,000 shares were redeemed for (10,029.82) ounces of gold.
• The net decrease in net assets resulting from operations was $(3,315,223), including a Sponsor Fee of $(38,582), a realized gain on the sale of gold to pay expenses of $1,741,468, and a net change in unrealized depreciation on investment in gold of $(5,018,109).
• As of June 30, 2023, the fund held 48,807.094 ounces of gold with a market value of $93,331,366.
• The fund's only recurring expense is the Sponsor Fee, which is 0.15% of the daily NAV.

Sentiment

Score: 5

Explanation: Neutral sentiment. The fund's performance is directly tied to the price of gold, which decreased during the quarter. While the fund continues to operate as intended, the decrease in NAV is a negative factor.

Positives

• The fund continues to operate according to its investment objective of reflecting the performance of gold bullion.
• The Sponsor covers many of the fund's operating expenses in exchange for the Sponsor Fee.
• The fund only invests in responsibly sourced gold bullion.

Negatives

• The NAV per share decreased due to a decline in gold prices.
• The fund experienced a net decrease in net assets resulting from operations.
• The fund is subject to risks associated with fluctuations in the price of gold.

Risks

• The fund's performance is directly tied to the price of gold, which is subject to various market risks.
• Geopolitical events, such as the war in Ukraine, could cause volatility in the gold market and negatively impact the fund's performance.
• The fund is exposed to concentration risk as its sole business activity is investing in gold bullion.
• The fund is an emerging growth company and may take advantage of certain exemptions from reporting requirements.

Future Outlook

The fund's future performance is dependent on the price of gold, which is subject to various market factors and geopolitical events.

Industry Context

The Franklin Responsibly Sourced Gold ETF competes with other gold ETFs, such as the SPDR Gold Trust (GLD) and iShares Gold Trust (IAU), by offering exposure to responsibly sourced gold bullion.

Comparison to Industry Standards

• The Sponsor Fee of 0.15% is competitive with other gold ETFs.
• The fund's focus on responsibly sourced gold differentiates it from some competitors.
• SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) are the largest gold ETFs, with significantly higher AUM and trading volume.

Related Party Transactions

• Franklin Holdings, LLC is the Sponsor of the Trust.
• Franklin Distributors, LLC serves as the Marketing Agent of the Fund and is an affiliate of the Sponsor.
• Franklin Resources, Inc. (FRI) is the ultimate parent company of the Sponsor and the Marketing Agent.
• As of June 30, 2023, 785,000 shares of the Fund were held by the related party.

Stakeholder Impact

• Shareholders experienced a decrease in NAV per share due to the decline in gold prices.
• Authorized Participants engaged in creation and redemption activities.
• The Sponsor continues to receive the Sponsor Fee for managing the fund.

Key Dates

Keywords

Gold ETF, Franklin Responsibly Sourced Gold ETF, Gold Bullion, NAV, Sponsor Fee, FGDL, Responsible Gold, LBMA, Financial Results, Q2 2023