ETF Securities is set to launch four new exchange traded commodities (ETCs) onto the Australian Securities Exchange (ASX), offering investors access to particular metals for the first time.
The new ETCs that will be available to investors from December 2008 are the ETFS Physical Platinum, ETFS Physical Palladium, ETFS Physical Silver, and the ETFS Physical PM Basket, which comprises an allocation of each metal as well as gold.
ETF Securities has also acquired 100 per cent of the existing ASX listed gold ETC.
“What is unique about the products is they are actually backed by physical, allocated bullion,” ETF Securities representative Hector McNeil said.
“It means… it is not a credit risk against another organisation… it is your metal held in a vault and we actually publish every bar number on our website,” he said.
Buying one unit in an ETC will translate into owning one tenth of an ounce of gold, platinum or palladium, or an ounce of silver depending on which commodity the investor selects.
Based on this allocation the investor can, if he or she owns sufficient units, physically redeem their metal if so desired.
“By holding the physical metal you actually become a feature of the demand story in that commodity,” McNeill said.
Investing in ETCs can also enhance the diversification of an investment portfolio, as these commodities are negatively correlated to bonds and equities, according to McNeill.
All of the ETCs are open-ended and there are no entry or exit fees charged on any of them.
“The gold itself costs 40 basis points to invest in on an annual basis… and the platinum, palladium, and silver will cost 50 basis points, with the basket being a blend of fees,” McNeill said.
