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The trend is always your friend or so the saying goes when it comes to trading. To invest in Emerging Markets or Commodities sectors, the trend since 2007 / 2008 has been to utilize ETF vehicles. However, is this the right strategy?

U.S. Global Investors, a boutique investment advisory company, specializes in natural resources, emerging markets and global infrastructure. As an advisory and fund company, they have so far chosen to stick to an organic growth strategy that relys on mutual funds to compete head on with ETFs.

From a January 2010 press release, Frank Holmes, U.S. Global’s CEO and chief investment officer was quoted as saying, “Our approach to active fund management has allowed us to outperform the gold and gold-equity ETFs in the marketplace. We believe that active management will become even more valuable in this sector as money is herded into ETFs, where stock-picking is a less important part of the investment process.”

Additionally, from the company’s earnings call on Friday, February 5, 2010, Mr. Holmes commented, “Our general thought on ETFs is that it is the hot sector to be in, but we’ll outperform them with active money management and strong performance. Long-term thinking is the key,”

Can U.S. Global Investors really compete long-term with the explosion of ETFs competing in the same sectors?
Will actively managed ETFs take away some of the competitive advantage offered by U.S. Global Investors ?

Be sure to check out my related post on ETFs competing against Mutual Funds:

• ETFs increasingly challenging mutual funds