Today a newcomer to the U.S. ETF market is teaming up with Exchange Traded Concepts to roll out its own physical gold ETF. The Perth Mint Physical Gold ETF (AAAU) will be backed by Australia’s Perth Mint, and will allow investors to redeem their shares for gold in a variety of forms—minted bars, cast bars or coins.
The fund comes with an expense ratio of 0.18% and lists on the NYSE Arca.
AAAU is a unique animal among gold funds, combining the most distinctive features of a variety of other physical gold ETFs. First, at 18 basis points, it’s one of the cheaper physical gold funds available to investors, matching the price of the SPDR Gold MiniShares Trust (GLDM). And like GLDM, each share of AAAU represents 1/100 of an ounce of gold.
Unlike GLDM, however, the fund’s fees are deducted in ounces rather than being converted to cash first. That minimizes tracking error, according to Perth Mint CEO Richard Hayes.
However, the gold held by the fund is stored in the central bank vaults of Perth, Australia, the largest network of vaults in the southern hemisphere, Hayes says, adding that the gold underpinning AAAU is guaranteed by the state government of Western Australia, which has an AA+ rating from Standard & Poor’s.
According to the Perth Mint’s website, it offers the world’s only government-guaranteed precious metals investment and storage program. Further, the Mint represents roughly 15% of the world’s gold mine production, Hayes says.
As noted earlier, AAAU’s shares can also be redeemed for actual gold in a variety of forms. The only other physical gold fund that allows that is the VanEck Merk Gold ETF (OUNZ).
“We believe that the way we’ve structured the fund makes it very, very flexible,” said Hayes.
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