Exchange traded commodities provider ETF Securities has reported growth of more than USD1.86bn in assets for its physical precious metals ETCs over the past year.
Exchange traded commodities provider ETF Securities has reported growth of more than USD1.86bn in assets for its physical precious metals ETCs over the past year. In total, the firm’s physical precious metals ETCs have accumulated total assets of USD1.9bn since their launch on April 23, 2007.
The firm says demand for precious metals ETCs reflects investors’ plummeting confidence in the US dollar as a store of value and financial sector creditworthiness as a result of the sub-prime mortgage crisis in the US and an extremely accommodative monetary policy by the US Federal Reserve, as well as a search for real asset inflation hedges and diversification away from equities, bonds and credit products.
ETF Securities’ physical precious metals ETCs are traded in US dollars, euros and sterling and are listed on the London Stock Exchange, Deutsche Börse, Euronext Amsterdam, Euronext Paris and Borsa Italiana. In total, the firm has more than USD2.2bn in precious metals ETCs including newly-listed short and leveraged products.
ETFS Physical Gold is the most highly traded ETC in Europe, having seen monthly trading volumes increase to USD308m and total assets rise to USD1bn. ETFS Physical Platinum has seen monthly volumes increase to USD57m and total assets reach USD776m – an increase of 3.8 times since December.
ETFS Physical Silver has seen monthly volumes reach USD70m with total assets of USD90m, while ETFS Physical Palladium averages monthly volumes of USD20m and has USD80m in assets. ETFS Physical PM Basket, which has an allocation of 42 per cent gold, 20 per cent platinum, 26 per cent silver and 12 per cent palladium, has assets of USD175m.
‘Since launching our platform of physical precious metals ETCs a year ago, we have seen huge demand,’ says ETF Securities chief operating officer Nik Bienkowski, noting that the firm now offers a total of 16 precious metal ETCs.
‘ETCs have lowered many of the barriers that previously prevented investors from investing in the precious metals market, including access, trading and operational risks, custody and transaction costs. Globally, more than USD35bn has been invested in commodity ETCs and ETFs, including USD25bn in precious metals ETCs.
‘Unlike many other commodities, precious metals are durable, homogenous and easily stored, enabling ETCs to be backed by allocated physical bars which have transparent pricing and carry no credit risk. Physical ETCs save investors from many of the difficulties associated with purchasing precious metals, such having to store and insure physical bars.
‘Our ETCs track the price of commodities, not a portfolio of equities. This is an important distinction as commodities have a very low and often negative correlation with equities, providing a genuine portfolio diversification. They are also extremely low cost, with annual fees of 0.49 per cent for long ETCs, whereas commodity equity funds often have up-front fees of up to 5 per cent and annual management fees ranging between 1.5 and 3 per cent.’
