iShares launches physical ETC range

11 Apr 2011 | 09:38
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iShares has unveiled its inaugural range of precious metals ETCs on the London Stock Exchange, offering UK investors exposure to the performance of physical commodities.

The ETF provider has listed the iShares Physical Gold ETC, iShares Physical Silver ETC, iShares Physical Platinum ETC and the iShares Physical Palladium ETC.

Demand for precious metals is soaring, amid inflation concerns and enduring turmoil in the Middle East and North Africa.

Gold prices hit record highs last Wednesday, reaching $1462.93 an ounce, fuelled by inflation fears and the declining US dollar. Silver prices also hit a 31-year high at $39.77 an ounce, a price level previously seen in 1980 after the oil crisis.

iShares, the largest ETF issuer in the world in terms of assets under management and number of products, offers broad-based commodity exposure through ETFs, but this launch marks the issuer's first foray into the physical ETC space.

Unlike futures-based commodity ETFs, which can diverge significantly from the price of the actual commodity, these ETCs aim to return the actual price of the precious metals, less fees.

The ETCs track the daily price movement by holding the physical metal, which is valued at the London Precious Metal (PM) fix price.

ETCs are debt securities  - rather than funds or ETFs - and are fully backed by physical holdings of the respective commodities as a form of high quality collateral. ETCs are not UCITS compliant, as they are not funds.

The products' respective metal holdings of gold, silver, platinum and palladium are held by JP Morgan Chase Bank in London, as custodian.

iShares publishes the net asset value, the physical holdings, costs and performance figures for its ETCs daily, online.

The ETCs are also as liquid as ETFs, trading and settling on a stock exchange like stocks, allowing investors to buy and sell them at any time during the trading day.

ETCs are useful for investors who are unable to physically invest in and store a commodity, or do not have the ability to trade futures, but want to invest in commodities.

The Gold ETC has a total expense ratio of 0.25%, while silver, platinum and palladium have TERs of 0.40%. They are eligible for SIPPS and ISAs.

 

 

Categories: Investment

Topics: Etf/etcBlackrockIshares

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