Exchange traded fund provider Global X Funds is changing the underlying index of the Global X Gold Explorers ETF, which will now track the Solactive Global Gold Explorers & Developers Total Return Index.
The fund is expected to begin implementation of the change no earlier than 30 November 2016, with the change occurring in two phases.
The phased approach is intended to enable the Global X Gold Explorers ETF's adviser, Global X Management, to make the necessary adjustments to portfolio holdings in a manner that minimises impact to fund shareholders.
In the first phase, expected to commence in the fourth quarter of 2016, the fund will track the Solactive Global Gold Explorers & Developers Total Return Transition Index, an interim index that will gradually reduce exposure to small-capitalisation stocks while proportionately increasing exposure to other stocks based on their weightings in the new index. This first phase is expected to be implemented over the course of approximately six months.
In the second phase, the Fund will begin tracking the Solactive Global Gold Explorers & Developers Total Return Index, which is expected to occur upon completion of the first phase. In an effort to protect the fund from the potential for harmful "front running" by traders, the exact timing of the index changes will not be disclosed to investors.
The new index is designed to measure broad based equity market performance of global companies involved in gold exploration, including companies that are engaged in both gold exploration and limited levels of gold production (developers). The stocks are screened for liquidity and weighted according to modified free-float market capitalisation. A specific capping methodology is used at the time of the semi-annual index review to seek to assure compliance with the rules governing the listing of financial products on exchanges in the US.