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BetaShares launches Australia’s first hedged gold ETF

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BetaShares Capital Limited (BetaShares) has listed Australia’s first Australian dollar (AUD) hedged gold bullion ETF on the Australian Securities Exchange (ASX), substantially removing the impact of movements in the AUD/USD exchange rate which have, in recent times, negatively impacted investors’ returns from gold ETFs.

Physical gold has delivered exceptional returns over the past decade as investors flocked to safe haven assets in volatile markets. Backed by physical gold bullion and trading under the ASX Code ‘QAU’, BetaShares Gold Bullion ETF (A$ Hedged), gives investors a simple, low-cost, liquid and efficient way to access the precious metal without the currency risk. 

Drew Corbett, Head of Investment Strategy & Distribution at BetaShares said in addition to providing strong returns in down markets, gold had proven resilient in the recent share market recovery.

"In the last 2 years to April 2011, the S&P/ASX 200 delivered an 18% pa return while the gold price in USD increased by 33% p.a. In addition, over the last 10 years, hedged gold returned almost 5% pa more than unhedged gold", he says.
An ETF provides a far simpler, more transparent way for investors to access the price of gold than alternatives. Attempting to obtain gold exposure via investing in gold mining companies, accessing futures markets and direct gold ownership, all expose investors to other complexities and risks.

"Purchasing gold companies as a means to access the gold price introduces company and stock market risk, the futures market can be complicated and difficult to access and direct ownership involves substantial insurance and storage costs.  A hedged gold ETF is the most pure and simple way of gaining exposure to movements in the price of gold," Corbett says.

In addition, many investors are concerned that large and growing budget deficits around the world may result in a resurgence in inflation. Gold has traditionally been used by investors to protect against the risk of inflation, and many investors are accordingly adding additional gold exposure as part of their investment strategies.
In addition to the potential for strong investment returns and its ability to act as a hedge against inflation, gold’s low correlation with other asset classes makes it a strong addition to a diversified portfolio for investors.

 "Although we saw most other asset classes become highly correlated during the recent global financial crisis, gold performed strongly," says Corbett.

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