Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI)

Overview

The Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI) is an exchange-traded note designed to provide investors with exposure to the performance of a covered call strategy on gold. It seeks to generate income by selling call options on gold, potentially limiting upside participation in gold price appreciation while providing a yield.

Reputation and Reliability

Credit Suisse has a long-standing history in financial services, although its reputation was affected by recent events leading to its acquisition by UBS. Credit Suisse has generally been a reliable issuer of ETNs, but its financial stability became a concern before the acquisition.

Management Expertise

Credit Suisse has extensive experience in managing structured products, including ETNs. The management team involved in GLDI likely possessed expertise in both gold markets and options trading.

Goal

The primary investment goal of GLDI is to provide investors with a current income stream by implementing a covered call strategy on gold, while also offering exposure to the price of gold.

Investment Approach and Strategy

Strategy: GLDI implements a covered call strategy by holding gold assets and simultaneously selling call options on those assets. This generates income from the option premiums but limits the potential gains if gold prices rise significantly.

Composition GLDI's composition consists primarily of a notional investment in gold and the associated covered call options positions. It doesn't hold physical gold but rather tracks the returns of a gold-based index that incorporates the covered call strategy.

Market Share: GLDI's market share within the gold-related covered call strategy ETN/ETF space is relatively small.

Total Net Assets (AUM): 18745241.66

Key Competitors

• YLD (Global X Funds)
• NUSI (Nationwide)
• FEPI (Franklin Templeton)

Competitive Landscape

The covered call ETF industry is competitive, with numerous ETFs offering various covered call strategies across different asset classes. GLDI offers a specific covered call strategy on gold, which differentiates it from broader covered call ETFs. Its advantage is the focus on gold, but its disadvantage is that it is subject to the performance of gold. Competitors are in various sectors.

Historical Performance: Historical financial performance varies depending on gold price movements and option premiums. It's expected to underperform direct gold investments during strong gold rallies due to the covered call strategy limiting upside.

Benchmark Comparison: The appropriate benchmark would be a gold index (e.g., S&P GSCI Gold Index) combined with an index tracking covered call strategies. GLDI's performance should be compared against these benchmarks to assess its effectiveness.

Expense Ratio: 0.65

Average Trading Volume

GLDI's average trading volume is moderate, indicating reasonable liquidity, however may not be suitable for very large orders.

Bid-Ask Spread

The bid-ask spread is typically moderate, which could affect the cost of frequent trading, especially for high-volume traders.

Market Environment Factors

GLDI is affected by gold prices, interest rates, market volatility (which impacts option premiums), and investor sentiment towards gold as a safe-haven asset.

Growth Trajectory

GLDI's growth trajectory depends on investor demand for income-generating gold products and its ability to consistently deliver on its covered call strategy.

Competitive Edge

GLDI's competitive advantage lies in its focused approach to generating income from gold through a covered call strategy. It provides a specific solution for investors seeking income from gold assets. Unlike broad market covered call ETFs, GLDI provides targeted exposure to the gold market with an added income component. The ETN structure may offer tax efficiencies or inefficiencies relative to ETFs depending on the investor's tax situation.

Volatility

GLDI's volatility is influenced by both gold price volatility and the covered call strategy, which can mitigate some downside risk but also limit upside potential.

Market Risk

The primary market risk is the fluctuation of gold prices. Additionally, the covered call strategy limits upside participation in gold price increases, potentially leading to underperformance compared to direct gold investments during bull markets.

Ideal Investor Profile

The ideal investor for GLDI is someone seeking current income and has a neutral to slightly bullish outlook on gold. It is for investors who understand and accept the limited upside participation due to the covered call strategy.

Market Risk

GLDI is best suited for income-seeking investors who are comfortable with moderate risk and understand the mechanics of covered call strategies. It is not ideal for those seeking pure gold price appreciation or aggressive growth.

GLDI is a covered call ETN that aims to provide current income by selling call options on gold, making it a suitable investment for income-oriented investors with a neutral to slightly bullish view on gold. It offers exposure to the gold market with an added income component, although the strategy limits upside gains. Its performance is linked to gold prices and option premiums, so investors should carefully consider these factors. The ETN structure has both advantages and disadvantages relative to owning gold directly or owning a gold ETF.

Data Sources:

• SEC Filings
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor.