Invesco has reduced the expense ratio on the $13.8 billion Invesco Physical Gold ETC from 0.19% to 0.15%.
Invesco and Amundi offer gold ETCs with the lowest fixed annual fees in Europe.
This marks the third time that the issuer has lowered the ETC’s expense ratio in the past two years, having previously trimmed it from 0.29% to 0.24% in December 2018 and from 0.24% to 0.19% in February this year.
Gary Buxton, Head of EMEA ETF at Invesco, commented, “For more than a decade, our gold ETC has provided investors with an efficient way to gain exposure to the performance of the gold price. As the ETC has grown significantly in size, we have been able to share some of the economic and operational advantages with our investors. We are now doing this again with a fee cut.”
The series of expense-ratio reductions highlights the intense competition amongst providers of gold-backed ETPs in Europe, a rivalry that may be intensifying as the segment attracts record inflows from investors seeking to bolster their portfolios from the negative economic effects of the Covid-19 pandemic.
According to Invesco, Europe-listed gold ETPs raised more than $10bn in net new assets in the first seven months of 2020. Demand remains elevated, despite steady gains in the global stock market, with gold ETPs in Europe gathering $1.4bn in July of which roughly half flowed into the Invesco Physical Gold ETC.
The revival of interest in gold has driven the precious metal to be one of the best-performing assets in 2020 with a return of 34.6% year-to-date (Friday 7 August 2020), and the gold price recently broke through the $2,000/ozt mark for the first time.
While gold has benefitted from a spike in demand for safe-haven assets, as well as increasing relative value due to falling real yields, Invesco believes that the risk of inflation could add another major support for the gold price going forward.
Chris Mellor, Head of EMEA Equity and Commodity ETF Product Management at Invesco, said, “Gold has been driven by not only the economic impact of the pandemic but also the reaction of central banks to the crisis. Low to zero interest rates, negative-yielding debt, ballooning central bank balance sheets, these are all factors that should favour holding real assets such as gold, especially at a time of such uncertainty.”
Amid this robust demand, gold ETPs have benefitted in particular as they provide investors with an effective and liquid means to add gold to their portfolios.
The Invesco Physical Gold ETC gains its exposure by tracking 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. Invesco aims to hold only gold bars that adhere to the LBMA’s guidance on the responsible sourcing of gold, helping to allay concerns from investors that adhere to socially responsible principles.
The ETC is listed on the London Stock Exchange in US dollars (SGLD LN), pound sterling (SGLP LN), and GBP-hedged (SGLS LN) share classes. It 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).
Following the latest price cut, the ETC once again offers the joint-lowest fixed annual fee of any physical gold exchange-traded product available in Europe.
This accolade is shared with Amundi which introduced the Amundi Physical Gold ETC (GOLD FP / GLDA LN) in May with an expense ratio of 0.15%. The ETC’s assets under management have grown to over $4.1bn in under three months, further highlighting how low-cost products have succeeded in gaining market share.
Invesco argues that its ETC is actually the lowest cost of all European listed physical gold products when looking at the total cost of exposure, owing to a bid-offer spread that is typically around just two basis points.