Franklin Templeton Holdings Trust (FGDL)
Franklin Responsibly Sourced Gold ETF (FGDL) is a gold-backed ETF whose sole asset is LBMA-priced gold bullion stored in allocated accounts, with a 0.15% annual fee paid via small gold sales. FGDL’s objective is to mirror the gold price, less expenses, and it sold or created shares only in 50,000...
Franklin Responsibly Sourced Gold ETF (FGDL) 2025 10-K Review
The latest 10-K filing for Franklin Responsibly Sourced Gold ETF (NYSE Arca: FGDL) offers a detailed look under the hood of an exchange-traded fund that stakes its performance on the price of gold bullion. Launched in mid-2022 as a series of Franklin Templeton Holdings Trust, FGDL has rapidly grown to over $186 million in assets and delivered a net asset value (NAV) gain of 40.48% in the fiscal year ended March 31, 2025. This review examines the cornerstone elements of the 10-K: the trust structure, investment objective, operating mechanics, financial performance, risk factors and how they inform FGDL's investment potential.
Warren.AI 💰 6.0 / 10
Trust Structure & Key Service Providers
Franklin Templeton Holdings Trust (the “Trust”) is a Delaware statutory trust that currently offers only one series—FGDL. Franklin Holdings, LLC, a subsidiary of Franklin Resources, Inc., acts as the Sponsor. The Trust is not an SEC-registered investment company under the 1940 Act and is not regulated by the CFTC as a commodity pool, though it tracks a commodity.
Major service providers include:
- Administrator & Transfer Agent: BNY Mellon Asset Servicing
- Cash & Gold Custody: BNY Mellon (cash) and JPMorgan Chase London branch (gold)
- Trustee: CSC Delaware Trust Company
- Marketing Agent: Franklin Distributors, LLC
These arrangements insulate FGDL shareholders from direct counterparty credit risk beyond custodial negligence.
Investment Objective & Strategy
FGDL’s sole goal is to track the price of gold bullion, less a total expense ratio of 0.15% annually. Unlike actively managed funds, FGDL holds only two asset types:
- Allocated Gold Bullion – London Good Delivery bars held in the Fund’s Allocated Gold Account.
- Cash – Primarily to facilitate redemptions or expenses, but FGDL strives to minimize cash balances.
FGDL employs a passive approach: it does not hedge, doesn’t buy or sell gold tactically, and sells only as needed to pay its Sponsor’s fee and any extraordinary costs.
Responsible Sourcing Policy
A standout feature is the ESG lens on bullion sourcing. FGDL targets “post-2012 gold” refined under LBMA’s Responsible Gold Guidance, emphasizing anti-money laundering, human rights, and environmental standards. While temporary holdings of older gold are permitted under market constraints, the policy requires prompt replacement with post-2012 bars when liquidity allows.
Creation & Redemption Mechanics
Shares trade on NYSE Arca like any ETF. However, new shares are created or redeemed only in blocks of 50,000 shares (“Creation Units”) by Authorized Participants. The in-kind exchange involves delivering or receiving unallocated gold bullion, which the custodian then allocates to or from the Fund’s Allocated Account.
Key merits:
- Arbitrage Efficiency – Creation/redemption in gold helps keep market price aligned with NAV.
- Cost Transparency – A fixed $500 transaction fee for each order (possibly waived for marketing support).
Drawbacks:
- Unallocated Gold Risk – Until allocated, gold sits in unallocated accounts, exposing the Fund to unsecured exposures if a dealer fails.
- Liquidity Windows – Gold market hours differ from US equity trading hours, potentially widening bid-ask spreads and premiums/discounts after COMEX closes at 1:30 pm ET.
Valuation & NAV Computation
On each trading day, the Fund values its gold at the LBMA Gold Price PM (3:00 pm London). NAV is calculated at 12:00 pm New York time by the Administrator. If the PM price is unavailable, the last published LBMA auction price—AM or PM—applies, or the Sponsor may select an alternative fair value basis.
Financial Performance Highlights
For the year to 03/31/2025:
- Net Asset Value rose from $29.57 to $41.54 per share (up 40.48%).
- Net Assets grew from $62.1 million to $186.9 million, driven by gold price appreciation and net creations of 2.4 million shares.
- Net Investment Loss amounted to $0.15% of fund assets, reflecting the Sponsor’s 0.15% fee—sold via small gold transfers.
Key drivers:
- Gold Price spiked from $2,214.35/oz to $3,115.10/oz (LBMA PM), producing net realized & unrealized gains of $34.7 million.
- Share Issuances added 3.15 million shares (42,022 oz) versus 0.75 million redeemed (10,005 oz), illustrating investor demand.
Risk Factors – What Could Go Wrong?
- Volatility – Gold’s speculative swings can cause steep NAV moves. A 10% downturn in gold would mirror a 10% NAV drop.
- Expense Drag – Ongoing gold sales to pay fees mean the ounces per share slowly decline. Without price gains, NAV erodes.
- Market Liquidity – Creation or redemption suspensions (e.g., gold market emergency) can widen NAV premiums/discounts.
- Benchmark Dependence – LBMA Gold Price PM is not infallible; any manipulation or technical outages could delay NAV updates.
- Counterparty/Custody – Unallocated gold is an unsecured claim on the bullion dealer. Any custodian or sub-custodian insolvency could delay gold allocations or cause losses.
- Regulatory & Tax – As a “grantor trust,” gains flow to shareholders, taxed at up to 28% on long-term collectible gains. No US income distributions.
Investment Outlook & Score
FGDL offers a low-cost, simple ticket on gold with an ESG screen. Investors seeking pure gold exposure should appreciate the in-kind structure and responsible sourcing, but must accept ETF-typical mechanics: no yield, daily gold sales, and tax drag on capital gains.
Score: 6.0/10
FGDL fits well as a tactical or strategic gold allocation for risk-aware investors. Those seeking yield, corporate governance or broad diversification must look elsewhere.
Read the full 10-K deep dive and discover if FGDL measures up to your portfolio needs!