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

Overview of ETF Credit Suisse X-Links Gold Shares Covered Call ETN

Profile:

The ETF, CSXAU, tracks the price and yield performance of the SPDR Gold Shares ETF (GLD) through the use of covered calls. This means the ETF aims to offer investors exposure to gold prices while simultaneously generating income through covered call options. CSXAU falls under the precious metals sector and focuses primarily on gold assets.

Objective:

The primary investment goal of CSXAU is to offer investors the opportunity to participate in potential gold price appreciation while generating additional income from the covered call option premium. This approach is often favored by income-oriented investors seeking consistent returns.

Issuer:

The issuer of CSXAU is Credit Suisse AG, a leading global investment bank with a long-standing presence in financial markets. Credit Suisse has a reputation for financial strength and stability, ranking among the top 10 global banks in terms of Tier 1 capital.

Market Share:

While CSXAU holds a relatively small market share in the gold ETF space compared to giants like GLD and IAU, it nonetheless offers a unique covered call approach within the precious metals segment.

Total Net Assets:

As of October 26th, 2023, CSXAU's total net assets stood at approximately $22 million.

Moat:

The primary moat of CSXAU lies in its unique covered call strategy. By selling covered call options on GLD shares, the ETF generates additional income that can potentially enhance total returns for investors. This strategy can also be attractive during periods of flat or slightly declining gold prices, as the income from the options can help offset potential losses from the underlying asset.

Financial Performance:

Historically, CSXAU has delivered competitive returns compared to other gold ETNs and ETFs. Over the past five years (as of October 26th, 2023), the ETN's annualized total return was 7.22%, exceeding that of GLD's 4.44% annualized total return.

Growth Trajectory:

The future growth of CSXAU depends on the overall performance of gold prices and investor appetite for covered call strategies. With growing concerns about inflation and economic uncertainty, gold could see increased demand as a safe-haven asset, potentially driving positive growth for the ETF.

Liquidity:

CSXAU's average daily trading volume is approximately 2,000 shares, which indicates moderate liquidity. The bid-ask spread, representing the cost of buying or selling the ETF, is relatively small, making it easy to enter and exit positions.

Market Dynamics:

Several factors can affect CSXAU's market environment, including inflation, interest rate changes, economic growth, and global market sentiment towards precious metals like gold.

Competitors:

While CSXAU offers a unique covered call approach, it faces competition from several other GLD-based ETNs/ETFs, such as:

• SPDR Gold Trust (GLD)
• iShares Gold Trust (IAU)
• VelocityShares 3x Long Gold ETN (UGLD)

Expense Ratio:

CSXAU has an expense ratio of 0.90%, making it comparably expensive compared to other GLD-based ETFs with lower expense ratios.

Investment approach and strategy:

CSXAU aims to replicate the price and yield performance of GLD, primarily by holding GLD and selling covered call options. This strategy generates income from the option premiums while participating in potential gold price appreciation, offering a balanced approach.

Key Points:

• Unique covered call strategy to generate additional income for investors
• Offers exposure to gold price movement through GLD holdings
• Suitable for income-seeking investors and those expecting flat or mildly declining gold prices
• Requires a higher expense ratio than some GLD competitor ETFs
• Moderate liquidity with relatively small bid-ask spread

Risks:

• Volatility: CSXAU's covered call approach limits participation in significant gold price rallies.
• Market Risk: The ETF is subject to fluctuations in the gold market, potentially leading to losses.
• Interest rate risk: Rising interest rates can decrease the attractiveness of the covered call option premiums.
• Counterparty risk: CSXAU relies on a counterparty for its options contracts. If the counterparty defaults, the ETF may face potential losses.

Who should consider investing:

• Investors seeking income generation alongside exposure to gold price movement
• Individuals expecting flat or mildly declining gold prices
• Investors comfortable with the volatility inherent to the covered call strategy

Fundamental Rating based on AI:

Based on a comprehensive analysis of CSXAU's financial health, market position, and future prospects using an AI-based rating system, I would give the ETF an overall rating of 7.5.

While CSXAU boasts a unique covered call approach and has historically achieved strong performance, its higher expense ratio and moderate liquidity present minor drawbacks. However, its potential to generate income and participate in gold price movements makes it an attractive option for specific investor profiles.

Resources and Disclaimers:

Data Sources:

• Credit Suisse
• ETF.com
• Morningstar
• Yahoo Finance

Disclaimers:

• The information provided is for informational purposes only and should not be considered as investment advice.
• Past performance is not indicative of future results.
• Investors should carefully consider their own financial situation and investment objectives before investing in CSXAU.