WisdomTree has launched a new physically backed ETC in Europe that provides investors with low-cost access to gold.
Alexis Marinof, Head of WisdomTree Europe.
The WisdomTree Core Physical Gold ETP (WGLD LN) has listed on the London Stock Exchange in US dollars and comes with a fixed annual fee of just 0.15%, the joint-cheapest amongst comparable gold products domiciled in Europe.
The ETC is 100% backed by physical gold stored in HSBC’s London vaults. Only responsibly sourced gold bullion will be allocated as collateral in a bid to raise the ethical credentials of the ETC.
WisdomTree provides Europe’s broadest range of gold ETPs with $17 billion in assets under management across 11 gold products including physically-backed, currency-hedged, synthetic, leveraged, and inverse exposures.
Alexis Marinof, Head of WisdomTree Europe, said: “WGLD complements our extensive range of gold ETPs including the most comprehensive physical gold ETP range in Europe – so investors can choose the exposure that’s absolutely right for them. As market leaders in gold, precious metals, and commodity ETPs, we remain committed to building our differentiated product range and developing best in class solutions for investors.”
WisdomTree’s current flagship gold product is the $7.0bn WisdomTree Physical Gold (PHAU LN) which is virtually identical to WisdomTree’s newest offering except it comes with a pricier management fee of 0.39%.
PHAU has been falling out of favour with investors, with over $1.6bn in net assets redeemed from the ETC since the start of the year, including $828 million in November, at the same time that lower-cost rivals benefitted from a surge in gold demand.
The $13.9bn iShares Physical Gold ETC (SGLN LN), $13.3bn Invesco Physical Gold ETC (SGLD LN) and $3.2bn Amundi Physical Gold ETF (GOLD FP), all three of which are also priced at 15 basis points, attracted $5.1bn, $4.8bn and $1.7bn net inflows over the same period, respectively.
Gold has been one of the standout assets in 2020, returning roughly 20% so far this year, driven by investors seeking to protect their portfolios amid the Covid-19 market uncertainty. While recent encouraging news regarding several potential Covid-19 vaccines caused the gold price to pull back in November, along with a general reversal of flows out of gold ETCs, WisdomTree argues that the precious metal still has an important role to play in the near future.
Nitesh Shah, Director, Research, Europe, WisdomTree, commented: “Gold can play a number of roles in portfolios and deserves a strategic allocation as part of an investor’s core holding, particularly at a time of unprecedented monetary easing and fiscal stimulus. The diversification benefits of gold in 2020 so far has helped investors mitigate volatility and uncertainty, emphasizing the importance of holding this historic safe-haven asset in portfolios. Looking forward, with inflation once again on investors’ minds, the need to hold effective hedges against inflation, eroding portfolio value, will become all-the-more important – 2021 could see another year of strong returns for the precious metal.”
The ETC has been seeded with $5 million.