Invesco cuts fee on physical gold ETC

Feb 3rd, 2020 | By | Category: Commodities

Invesco has reduced the expense ratio on its $7.6 billion physical gold ETC from 0.24% to 0.19%.

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

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

Following the price cut, the Invesco Physical Gold ETC offers the joint-lowest fixed annual fee of any physical gold exchange-traded product available in Europe.

Invesco argues that the product is actually the lowest cost of all European listed physical gold products when looking at total cost of exposure, owing to a bid-offer spread typically around just two basis points.

The ETC tracks the LBMA Gold Price, 3pm fix, in USD, through the purchase of physical allocated gold bars which are stored securely in the London vaults of JP Morgan Chase Bank.

It is listed on the London Stock Exchange in US dollars (SGLD LN) and pound sterling (SGLP LN) and is also available in euros on Xetra (8PSG GY), Borsa Italiana (SGLD IM), and Euronext Amsterdam (SGLD IM), and in US dollars on SIX Swiss Exchange (SGLD SW).

Rising gold demand

Demand for gold rose throughout 2019 as investors sought to fortify their portfolios amid growing market volatility and geopolitical tensions.

According to the World Gold Council (WGC), $19.3bn flowed into gold ETPs globally last year, lifting total assets under management to new highs. Demand was strong in Europe with gold ETPs listed in the region attracting $8.8bn or 45.4% of global flows.

Chris Mellor, Head of EMEA ETF Commodity Product Management at Invesco, commented, “Investors have been turning to gold to provide a potential cushion in case of equity market volatility and concerns about slowing global growth and geopolitical risks.

“Gold tends to become even more attractive when yields on other investments, historically perceived as ‘safe havens’, are low or even negative. For a decade now, our physical gold ETC has offered investors an easy and efficient way to gain exposure to gold, and now for an even lower cost.”

The fee on the ETC was reduced previously, from 0.29%, in December 2018 and has gathered over $1.1bn in net inflows over the past year (as of 31 January 2020). It is, however, facing increased competition from rival low-cost products looking to capture a slice of the market.

These include the Amundi Physical Gold ETC, which debuted in May 2019 with an expense ratio of 0.19%  – it has accumulated over $1.2bn in assets since its launch – and the more seasoned WisdomTree Physical Swiss Gold (SGBS LN), which launched in 2009 and now also comes with an expense ratio of 0.19% following fee reductions from 0.29% to 0.25% in August 2017 and 0.25% to 0.19% in June 2019. It houses $2.3bn, up three-fold in the past year.

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