Investors gain precious metal alternative
Friday, 21 November 2008 11:20am
Platinum, palladium and silver are all at investor's fingertips after London based exchange traded commodities (ETC) provider, ETF Securities launched four precious metal ETCs on the Australian Securities Exchange (ASX).
The firm's ETC suite includes ETFS Physical Platinum, Palladium and PM Basket.
Hector McNeil ETF Securities head of sales and marketing, said financial planners would not notice any differences between trading an ETCs and exchange traded funds (ETFs).
He said, similar to exchange traded funds (ETFs), ETCs are open-ended securities that can be created and redeemed anytime and track the price of precious metal instead of a basket of equities.
Each ETC is backed by physical allocated metal that is held by HSBC, which holds more than $30 billion in precious metals for ETCs. Each ETC represents roughly one tenth of an ounce of platinum or palladium and a approximately an ounce of silver.
Graham Tuckwell, ETF Securities chair, said the firm chose to launch the ETC suite in Australia due to rising global demand for precious metals using the product overseas and to allow investors to access precious metals.
"The Australian market has always been very focussed on resource equities and investors will have the opportunity to get direct exposure to precious metals to complement equity investment," said Tuckwell.
"Unlike many other commodities, precious metals are durable and easily stored, enabling ETCs to be backed by allocating physical bars which have transparent pricing and carry no credit risk."
The ETC suite does not carry any entry or exit fees. Investors are charged a 50 basis point annual fee on the platinum, palladium and silver ETC and roughly 45 basis point annual fee on the PM Basket.
McNeil said the firm would not spend a lot of money on mainstream advertising, preferring to target financial planners and institutions with an education and awareness marketing strategy.
Michael Hobbs
