Enhanced Investment Products Limited’s ETF business, XIE Shares, has launched the XIE Shares FTSE Gold Miners ETF, The Gold Miners ETF, on the Hong Kong Exchange.
XIE writes that the Gold Miners ETF provides investors a cost effective way to gain exposure to global gold deposits worth US$900 billion.
The Gold Miners ETF invests in a basket of physical equities and replicates the FTSE Gold Mines Net Tax Index, which currently represents 35 global gold mining companies that produce a minimum of 300,000 ounces of gold per year. Countries represented in the ETF include Canada, US, South Africa, and Australia.
The Gold Miners ETF is designed to meet increasing investor demand for gold investing in light of a loss in confidence in paper money, caused by the increasing debt of developed countries. The firm writes that through systematic quantitative easing programmes, major central banks have pumped US$13.5 trn into the global economy since the financial crisis in 2008.
This debt, and recent political events such as Brexit and the US elections, point to more volatility and uncertainty in financial markets. Gold provides a hedge against inflation or deflation and is a store of value. EIP’s CEO Tobias Bland explains: “EIP is delighted to launch the first Gold Miners ETF in Hong Kong. This new product, the first of its kind on the HKEx, will enable retail and institutional investors to capitalize on gold price fluctuations through the ownership of gold mining stocks, which tend to go up and down more than the price of gold, given the size of their gold deposits relative to their market capitalization. This year, gold mining stocks are outperforming physical gold by approximately 50 per cent.”
Gold is a long-term theme promoted by CLSA’s Global Equity Strategist Chris Wood who believes that quantitative easing and declining confidence in central banks will lead to devaluation in paper money and a rise in the gold price, as investors seek a long-term safe haven.
CLSA Chairman and CEO Jonathan Slone comments: “CLSA is excited to bring ETF solutions to the market that expresses the firm’s research themes through our partner, Enhanced Investment Products Limited. Current political and global sentiment coupled with the actions of central banks increases the need for non-correlated assets. The Gold Miners ETF offers investors a cost effective solution to diversify their investments.”
Sudir Raju, Managing Director ETP Relationships, Asia, FTSE Russell says: “We are pleased that XIE Shares has decided to licence the FTSE Gold Mines Net Tax Index for its new ETF, the first to be tracking this index. FTSE Russell works closely with a number of firms in the Asia region and has a strong track record in developing a broad range of indexes and services across asset classes, which are suitable for benchmarking purposes and as tools in the creation of a wide variety of financial products, such as exchange traded funds.”
The Gold Miners ETF is the third ETF to launch following CLSA’s investment into EIP’s XIE Shares ETF business in September 2014. In April 2015, XIE Shares FTSE Chimerica ETF (3161.HK) launched as the first pure-play ETF to access Chinese New Economy stocks listed in America. In November 2015, XIE Shares CLSA GARY ETF (3102.HK) launched to provide investors with access to Asian companies with competitive yield, growth, and debt profiles. The CLSA GARY ETF is based on CLSA’s micro-strategy research.