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ETF Securities is seeing explosive growth in its five physical precious metal Exchange Traded Commodities (ETCs), having seen total assets under management (AUM) grow to $800 million from $65 million only 6 months earlier. This growth has far exceeded precious metal analyst forecasts, proving how popular physically backed precious metals ETCs have become.
The success is due to ETF Securities’ pioneering efforts in Exchange Traded Commodities (ETCs), having created the world’s first ETC in 2003. More recently ETF Securities has created a number of ground breaking products including over 40 ETCs tracking DJ-AIG Commodity Indices, 10 ETCs tracking oil prices and five ETCs tracking physical precious metals.
ETF Securities has seen total assets grow by $2 billion in 2007 with over 40% of new assets being attributable to physical precious metals. As a result of this growth, ETF Securities has the fastest growing physical precious metal ETC platform in the world.
Due to significant investor demand for simple access to commodities and more recently precious metals, all five physical precious metal ETCs have been listed on five European exchanges including the London Stock Exchange, Deutsche Borse, Euronext Amsterdam, Euronext Paris and Borsa Italiana. This demand has also been a result of investors wanting to diversify their investment portfolio into other asset classes which exhibit low correlation to equities and bonds.
Most recently, ETFS Physical Platinum (PHPT) and ETFS Physical Silver (PHAG) have shown the greatest interest. PHPT is now the largest platinum ETC in the world with over $150 million in assets, having grown by 650% in the past 6 months and by more than quadrupled in the past 6 weeks. PHAG is the fastest growing silver ETC in the world having grown by 1400% in the past 6 months and more than quadrupled in the past 6 weeks. Now exceeding 10 million ounces PHAG is the largest silver ETC in Europe.
While platinum and silver have seen most of the growth in recent weeks, ETFS Physical Gold (PHAU) is now the fastest growing Exchange Traded Gold product in Europe, growing 4.5 times faster than any other Exchange Traded Gold product in Europe in the past 6 months. Significant demand in this product has come from investors in the UK, Germany and Austria. PHAU now exceeds $470 million, an increase of over 575,000oz over this period.
ETF Securities has 2 other physical precious metal ETCs being ETFS Physical Palladium (PHPD) and ETFS Physical PM Basket (PHPM). PHPM assets have doubled in the past week to $60 million. With five physical metal ETCs trading in three currencies on five exchanges and eligible for UK pension accounts including PEP, ISA, CTF and SIPP, ETF Securities has provided simple and efficient access for all investor types.
All of the physical precious metal ETCs are backed by allocated metal – uniquely identifiable bars which carry no bank credit risk – the precious metal bars and ingots are held in trust in London by the Custodian HSBC Bank USA N.A., who is the world’s leading Custodian for ETCs with approx $20 billion of precious metals being held for such products. The metal held with the Custodian must conform to the rules for Good Delivery of the London Bullion Market Association (LBMA) and London Platinum Palladium Market (LPPM). Securities are only issued once metal is confirmed as being deposited into the Company’s bullion account with the Custodian.
Commenting on the response of investors for ETF Securities’ precious metal ETCs, Nik Bienkowski, Head of Listing and Research, said: “There has been significant increase in demand for ETCs linked to the price of commodities and particularly precious metals. Most recently, this demand has been for platinum and silver ETCs as investors seek to diversify their portfolios away from equities and bonds and into other asset classes.
“Many independent studies have shown that precious metals have low to negative correlation with equities and importantly, in times of stress, this low correlation is shown to hold. Given the current financial market uncertainty, we have seen strong inflows into ETF Securities physical metals ETCs which has grown over ten-fold since May 2007 to $800 million.
“Overall there has been a huge surge in global demand for ETCs with over $33 billion invested in the last three years, with approximately two-thirds 70% ($23 billion) invested in precious metals.”
