ETFS Plans Gold ETF With Vault In Singapore

July 23, 2010

ETFS adds another fold to the gold ETF plot by filing for a fund that will keep its holdings in Singapore.

The U.S. unit of ETF Securities, a global ETF issuer specializing in commodities, filed papers with the Securities and Exchange Commission to market a gold exchange-traded fund that would be the first to store its bullion in a Singapore vault.

The new ETF, the ETFS Asian Gold Trust, would join other physical gold ETFs on the market, including SPDR Gold Shares (NYSEArca: GLD), which stores its holdings in a vault in London. ETFS’ own existing gold ETF, the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), stores its ingots in a vault in Switzerland.

The company didn’t say when it might roll out the new ETF, and also didn’t disclose a ticker symbol or a possible cost of the fund to investors. Cost could turn out to be of critical importance to the success of the proposed fund after another competing U.S.-based gold ETF slashed its expense ratio at the start of this month.

The Cost Question

iShares, the San Francisco-based unit of BlackRock, cut the price on its COMEX Gold Trust (NYSEArca: IAU) by more than a third, to 0.25 percent, making it the cheapest on the market by a large margin. GLD charges 0.40 percent and ETFS’ own SGOL costs 0.39 percent.

State Street Global Advisors, the ETF firm behind GLD, hasn’t yet responded or commented on IAU’s pricing move, and neither has ETF Securities.

GLD is currently the world’s second-biggest ETF, with more than $50 billion in assets. IAU has about $3 billion in assets.

While it’s still too early to tell whether IAU’s pricing move will cause investors to shift their gold holdings into the cheaper ETF, data compiled by found incipient evidence that the process may have begun.

On Friday, July 9, about the same amount of money poured into IAU that exited GLD, prompting to ask "Did IAU Just Steal $59 Million From GLD?" in a story published the following Monday.

IAU, like GLD, keeps its gold in London.

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