U.S. Global Investors Says Bottom Found In AUM Flight

For Frank Holmes, CEO and CIO at U.S. Global Investors, the world might seem a precarious place. At its heyday in 2006 the mutual fund manager finished the year at $33.58. Now, a decade later and the world looks different. Passive investing is like a weed taking over the finely pruned mutual fund world and the Department of Labor’s fiduciary rule is breathing down the mutual fund industry’s neck. It is here Holmes sees his stock trading at $1.57 and he realizes what volatility is all about.

U.S. Global Investors

U.S. Global Investors must understand volatility — in their own stock

In a conference call last February, Holmes noted that, with the stock trading near the lowest point in history, their own stock price has been tremendously volatile over the past decade after a long period of slumber.

The standard deviation for the stock is plus or minus 4% — a feat which happens nearly 70% of the time. Over a six-month period of time it is not unusual to see GROW stock move as much as 68%, a feat it has accomplished several times over the last decade. To put the volatility in perspective, the S&P 500 a similar six-month price moving average is closer to 18%.

Understanding volatility has helped us because for our particular gold funds we have lower volatility versus the other gold funds and it’s how we manage the cash, because we understand this DNA of volatility and we’ve always commented to investors, don’t be afraid of volatility, understand what it is and be prepared for it to be able to benefit from it,” he said in the conference call.

There are numerous challenges facing mutual funds, particularly those where an easily accessible market beta can be cheaply purchased through stock or commodity market ETFs.

The firm, which manages eight mutual funds ranging from volatile commodity, mining and Chinese exposure to the “All American Equity Fund”, complains that platform fees are just some of the many issues that making operating a mutual fund challenging.

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Disclosure: None.

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