[This article originally appeared on our sister site, IndexUniverse.eu.]
ETF Securities is launching three new commodity exchange-traded funds (ETFs) on the Hong Kong stock exchange as the firm builds out its footprint in Asia.
The three ETFs will provide exposure to gold, silver and platinum via holdings in metals and other ETFs. The new funds will be listed on Wednesday 28 November.
Fred Jheon, managing director and head of Asia Pacific at ETF Securities, told IndexUniverse.eu: “We are the first ETP provider to launch a suite of physically backed precious metal products on the Hong Kong exchange.”
“This listing is the culmination of a year’s work of planning and working together with our business partners and regulators,” said Jheon.
“We have an office and team based in Hong Kong to support the launch of these locally domiciled products and are excited about building our presence and business in the region.”
“Most ETFs in the Asian market are equity-based, with only two percent of regional ETF assets represented by commodities.”
There are currently three other gold trackers listed on the Hong Kong exchange, including two locally domiciled funds from Value and Hang Seng and a cross-listing of State Street’s New York-based SPDR Gold ETF (NYSEArca: GLD), the world’s largest gold tracker.
Jheon continued: “We are seeing growing demand from institutional advisors and discretionary wealth managers for more product breadth in Hong Kong, particularly around physically backed precious metals products. This is becoming an important theme for Hong Kong investors.”
ETF Securities says its new bullion funds’ primary objective is to acquire and hold the relevant precious metals in allocated accounts in vaults operated by the custodian, HSBC. Investors will have some exposure to unallocated bullion during the funds’ creation and redemption process. ETF Securities says the bullion its funds hold will meet the ‘good delivery’ standards set out by either the London Bullion Market Association (LBMA) or the London Platinum and Palladium Market (LPPM).
However, the new funds will also be able to gain exposure to precious metals via holdings in other ETFs. Such holdings in other precious metal ETFs will initially include those managed by the ETF Securities Group in the US and listed on the New York Stock Exchange, says the firm. According to the new funds’ prospectuses, such holdings will not exceed 10 percent 'under normal circumstances'.
The annual total expense ratios for ETF Securities’ new Hong Kong trackers are 0.39 percent for the gold ETF, 0.5 percent for silver and 0.6 percent for platinum.