First Exchange-Traded Funds Backed by Industrial Metals Will Start Dec. 10
ETF Securities Ltd., whose managers started the world’s first gold-backed exchange-traded product, said it will list similar funds holding copper, nickel and tin on the London Stock Exchange on Dec. 10.
Other ETPs backed by aluminum, lead and zinc will be introduced next year, the Jersey, Channel Islands-based company said in an e-mailed statement today. The first three funds will be denominated in dollars and carry a management expense ratio of 0.69 percent, it said. A seventh fund will track all six metals.
“They give investors, for the first time, direct access to the physical metals market,” ETF Securities Chairman Graham Tuckwell said in the statement. “Investors are increasingly looking at hard assets as a way to hedge against growing concerns about sovereign risk, currency debasement and potential inflation.”
ETF Securities, JPMorgan Chase & Co. and BlackRock Inc. have all announced plans to start such funds. Gold-backed ETPs accumulated 2,099 metric tons of bullion since they started in 2003, equal to nine years of U.S. mine output. Commodity assets under management rose $19 billion to a record $340 billion in October, Barclays Capital said last month.
Deutsche Bank AG will be the agent providing trading and customer services on the ETF Securities funds, and Flow Traders B.V. will be the official exchange market-maker, Scott Thompson, co-head of European sales at ETF Securities, said on a conference call today.
Copper prices have climbed 21 percent this year, reaching a record $9,044 a metric ton today, as falling inventories heightened speculation of a developing shortage. Tin has jumped 49 percent and nickel has increased 29 percent.
Prices of copper have gained as one unidentified company holds 50 percent to 79 percent of the stockpiles monitored by the London Metal Exchange, data from the exchange show. ETF Securities is not the holder of the dominant position, Thompson said.
The first three funds will have a management fee of 0.69 percent and an insurance cost of 0.12 percent, ETF Securities said. There is also a fee tied to the cost of storing metal in an LME-approved warehouse that’s equal to 36 cents a ton daily for copper, 45 cents for nickel and 42 cents for tin.
ETF Securities listed the world’s first gold exchange- traded commodity, according to the company’s website.
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