U.S. Global Investors (NASDAQ:GROW) has launched its latest ETF, WAR, listed on the New York Stock Exchange.
CEO Frank Holmes joined Proactive to discuss the ETF, which is focused on companies tied to defense and cybersecurity amid rising spending on these sectors.
Proactive: Welcome back inside our Proactive newsroom. Joining me now is Frank Holmes, CEO of US Global Investors. Frank, it’s great to see you again. How are you?
Frank Holmes: I'm great and enjoying the holiday season. Still more to come.
An exciting day for you and the team as you announce another ETF. This one is called WAR, and it’s listed on the New York Stock Exchange under the ticker symbol WAR. This isn’t about going to war but focuses on defense spending, which has grown significantly in recent years.
Absolutely. Defense spending has surged, particularly with the aggression of Putin. Just last night, there were attacks on power lines in Ukraine, causing instability in the region. We don’t believe this situation will end quickly. Our research highlights the importance of cybersecurity and advanced technology in defense, which this ETF addresses uniquely.
Global military spending reached $2.40 trillion in 2023. What specific companies or industries are included in this ETF?
Semiconductors, especially Nvidia, play a crucial role. These chips power drones, aerospace technology, and cybersecurity systems that use AI to protect systems. Our ETF integrates all these technologies to create a force shield for national defense.
Why is this significant for global markets?
NATO spending is inconsistent. For instance, only Poland is meeting its GDP contribution targets, while other countries lag. Former President Trump emphasized increased spending, particularly for Canada. In North America, the U.S. dominates, with contributions from select Canadian, Swedish, German, British, and Japanese companies.
Tell us more about the Smart Beta 2.0 investment strategy you use.
It’s a rules-based, dynamic strategy. We identify stock-picking factors and conduct regression analysis over 15 years to optimize portfolio construction. For example, in our gold ETFs, 30% is allocated to royalty companies. For JETS, we allocated 10% to each of the four largest U.S. airlines. For WAR, key industries include aerospace, semiconductors, and data centers.
Is there any crossover between JETS and WAR in terms of the companies included?
Some psychological overlap exists, especially when fear drives markets. For instance, gold prices often rise in times of fear. Similarly, the sentiment around national security drives spending on defense. China’s increasing military activity adds urgency.
When creating the WAR ETF, were you surprised by the number of companies meeting your criteria?
Definitely. The gold universe is relatively small—fewer than 100 producers worldwide. In contrast, the defense universe is larger and more diverse, providing a robust selection for our smart beta approach. It outperforms traditional benchmarks like NATO and S&P aerospace and defense indexes.
It will be interesting to see how it performs. The ETF, WAR, is now available on the New York Stock Exchange. Frank, thanks for your time. We’ll talk in 2025.
Stay safe, and may the force be with you.
Quotes have been lightly edited for clarity and style