Swiss & Global Expands in Industrial Metals Funds With Trafigura

Swiss & Global Asset Management AG, manager of precious metals exchange-traded products, is expanding into physical industrial metals supplied by Trafigura Beheer BV.

The JB Industrial Metals Funds will hold aluminum, copper, nickel and zinc, according to a company statement e-mailed today. They will start this year, according to Stephan Mueller, product developer of the industrial and precious metals funds. Trafigura will sell the metal, stored by its NEMS unit, a warehouse company approved by the London Metal Exchange, he said by phone today from Zurich.

“This is a new product generation that gives you efficiency in an area where there hasn’t been efficiency for the last decade or years,” Mueller said. “That’s really single-asset instrument, long-only. We’ll store the metal and hold it for our investors and nothing else. That’s the most important thing for us. The client has the opportunity to get as close as possible to the prices of copper, nickel, zinc and aluminum.”

JPMorgan Chase & Co. and Blackrock Inc. have won approval from the U.S. Securities and Exchange Commission to introduce exchange-traded funds linked to copper and have yet to start the products. ETF Securities Ltd. started the first ETPs backed by copper, nickel and tin in December 2010. Assets in the copper fund were 3,600 metric tons as of yesterday, according to the company. Global copper production was 20.1 million tons last year, according to the International Copper Study Group.

Qualified Investors

Swiss & Global will first start the subscription period enabling investors to place orders, Mueller said. The products will be only accessible by qualified investors. That generally means investors who have at least 500,000 Swiss francs ($530,673), he said.

The cost of investing in the fund will be reduced as much as 75 percent, Mueller said. For example, rent charged for storing aluminum in NEMS’s warehouses may be “in the range of 8 cents per ton per day,” Mueller said. That compares with as much as 48 cents a ton charged by LME-approved warehouses, according to the LME website.

Commodity investments fell $27 billion in April, the most in 11 months, on record sales of gold ETPs, Barclays Plc said June 7. The LME Index of six industrial metals on the LME has fallen 15 percent this year, and on June 24 was the lowest since June 2010. Mueller said it’s possible Swiss & Global will expand the funds into lead and tin.