New York-based ETF startup GraniteShares has unveiled the lowest cost physical platinum ETF available in the US – the GraniteShares Platinum Trust (PLTM US) – with an annual management fee of 50 basis points.
The GraniteShares Platinum Trust (PLTM US) costs just 0.50%.
PLTM follows the September 2017 launch of the GraniteShares Gold Trust (BAR US), the lowest cost gold-tracking ETF in the US with a total expense ratio (TER) of 0.20%.
GraniteShares, which launched in May 2017, has committed itself to disrupting the ETF industry by offering low-cost commodity ETFs with smarter product structures.
For this latest product, the firm has entered into an agreement with the World Platinum Investment Council (WPIC), a global market authority on physical platinum investment, to fund the development and launch of PLTM.
WPIC’s mission is to stimulate global investor demand for physical platinum through both actionable insights communicating the case for investing in platinum and targeted product development. Investment in the fund will be backed by physical platinum held in vaults in London, UK.
“We believe that platinum is one of the best investment stories never told. Many investors are simply not aware of its investment potential and our mission is to change that,” said Will Rhind, CEO of GraniteShares. “Platinum is a unique, durable metal that is used in a variety of ways, including in the reduction of vehicle emissions, the making of jewellery and in a range of industrial applications. Through PLTM, GraniteShares is seeking to offer cost-effective access to investing in platinum.”
Commodity ETFs typically play a minority but important role in mainstream portfolios by adding additional diversification benefits relative to a purely stock/bond allocation. Many investors tend to allocate to gold in this regard, and while monthly returns for gold and platinum have shown an approximate 57% correlation since 1993, platinum may offer more of a thematic play – underpinned by commercial industrial demand – on global growth, especially in the market for emission-reducing catalytic converters used in motor vehicles.
GraniteShares’ debut ETFs were two broad commodity funds – the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB US) and the GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF (COMG US). COMB and COMG each provide access to a portfolio of futures contracts tracking a range of commodities. The ETFs are structured as 40 Act funds and do not issue K-1s.
Schedule K-1s are distributed to shareholders of traditional commodity-based ETFs, but the GraniteShares ETFs have avoided this by investing in a wholly owned subsidiary based in the Cayman Islands which then invests in the underlying commodity futures. By doing so, investors in COMB and COMG will be taxed like a conventional mutual fund and will receive Form 1099 rather than the less favoured K-1s.