Precious-metal ETFs get warm welcome in HK
29 November 2012
News, Asia, Hong Kong
By Hui Ching-hoo
Market pundits have applauded the listing of three precious metal-related ETFs on the Stock Exchange of Hong Kong, a wholly-owned subsidiary of Hong Kong Exchange and Clearing (HKEx), further diversifying the ETF product mix in Hong Kong.
The ETFs, listed on the exchange on Wednesday (November 28), are the first three to be launched by ETF Securities (Hong Kong). All three ETFs, ETFS Physical Gold ETF, ETFS Physical Silver ETF, and ETFs Physical Platinum ETF, are designed to track the London benchmark prices of the respective metals.
The ETFS Physical Gold ETF will be the exchange's fourth gold ETF. With that, the total number of ETFs will increase to 100 and the number of ETF managers will increase to 21.
Morningstar ETF strategist, Asia, Jackie Choy tells Asia Asset Management that the expense ratio on the ETFS Physical Gold ETF is lower than SPDR Gold Trust, but higher than Value Gold ETF, although its fee is falling within the range of the cheaper counterparts. Nevertheless, the fund’s long-term performance continues to hinge on its trading volume.
He adds that the newly-launched ETFs enable investors to gain exposure to precious metals more easily than using derivatives.
HKEx Head of Trading Calvin Tai says: “The introduction of the first ETFs on silver and platinum will further enrich our product offering in precious metals. These three new ETFs are also in line with our corporate strategy of diversifying by adding asset classes to our equities and equities-related products.”
This has been a record year for the Hong Kong ETF market, with the launch of 35 new ETFs, including the three to be listed on Wednesday, the first RMB ETFs, the first RQFII, A-share ETFs and the first dual counter ETFs trading in both RMB and Hong Kong dollars. Other major investment themes of the ETFs launched this year relate to Hong Kong and regional equity indices.
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