‘Flight to safety’ leads to massive inflows for Invesco Physical Gold ETC

Apr 11th, 2019 | By | Category: Commodities

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The Invesco Physical Gold ETC (SGLD LN) has experienced over $500 million in net inflows year-to-date amid increased demand for safe-haven assets driven by political and economic uncertainty.

Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco

Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco.

Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco, commented, “Gold is often used for portfolio diversification, due to its low correlation with equities, and it can also appeal to investors who want to take a more defensive stance during times of market stress. We believe many investors are now de-risking their portfolios and buying gold ETCs in case equity markets become more volatile as details of Brexit unfold.”

The Invesco Physical Gold ETC is part of Invesco’s range of ‘core’ products that are designed to provide low-cost access to fundamental portfolio exposures.

The ETC offers exposure to changes in the spot price of gold by physically investing in gold bullion which is then held in JP Morgan Chase Bank’s London vaults.

The strong flows into the ETC year-to-date represent more than a 10% increase in the product’s assets. According to Invesco, the ETC began attracting increased demand from December 2018, when Invesco reduced the ETC’s fixed fee from 0.29% to 0.24%. Since then, it has recorded net new assets of $805m, over $300m more than any of its competitors in Europe.

Tom Digby, Head of EMEA ETF Client Trading at Invesco, said, “We know from our dialogue with market participants that recent activity in our gold ETC has been from a broad range of asset managers, wealth managers, and private banks across Europe. The choice of one product over another generally comes down to the overall cost the investor would expect to pay from the time they purchase to when they sell. Our gold ETC typically trades with a bid-offer spread of around three basis points, which together with one of the lowest fixed fees in Europe, offers investors the lowest total cost in Europe.”

The ETC’s flows are also representative of a broader trend of European investors increasing their gold exposure. Invesco notes that more than $1.4 billion in net inflows have gone into Europe-listed gold ETPs so far this year.

European investors are now invested more than ever in gold with AUM roughly doubling since December 2015 when the precious metal was at its lowest price in almost a decade.

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