The Royal Mint has become the first government-owned mint in Europe to issue an exchange-traded product with the launch of the Royal Mint Physical Gold Securities ETC on the London Stock Exchange.
The Royal Mint has listed a physical gold ETC on the LSE.
The ETC has been issued in partnership with white label ETF issuer HANetf and comes with a total expense ratio of 0.22%.
It is available to trade in USD (RMAU LN) and GBP (RMAP LN).
The product is fully backed by physical gold bars complying with LBMA Good Delivery criteria and sourced in line with the association’s Responsible Sourcing Programme.
This means that the underlying gold is from conflict-free sources and from producers maintaining higher standards of corporate governance and environmental and sustainability practices.
Moreover, unlike the majority of gold ETCs on the market, RMAU’s underlying physical gold is stored at The Royal Mint’s purpose-built vault near Cardiff, Wales. This means investors now have the ability to diversify their custody arrangements by owning an ETC that stores the precious metal outside of the mainstream financial system.
The link with the Royal Mint also means that securities in the ETC can be redeemed, subject to fees, for physical gold bars and coins, with delivery and storage provided by The Royal Mint.
Gold can play a number of useful functions within investment management, including as a liquid, safe-haven holding during times of market stress; a portfolio diversifier; and as a potential hedge against inflation. It can also be a source of positive return as demand for the metal, from both investment and commercial sources, increases.
Anne Jessopp, CEO of the Royal Mint, said, “This launch is a significant milestone for The Royal Mint as we look to the future and diversify our business for the 21st century. Today we are building on our 1,100 years of heritage and reputation for trust and security to expand into new ventures with the launch of our first-ever listed financial product, becoming the first Sovereign Mint in Europe to do so.”
Jatin Patel, Head of Wealth Management at The Royal Mint commented: “Gold continues to be recognised as the world’s leading means of trading and storing wealth. As one of the UK’s most trusted organisations, we are excited to be able to offer investors yet another way of gaining exposure to gold whilst having the confidence that it is safely stored in our vault.”
The ETC, which has been seeded with $150m, joins a relatively crowded space, including among others the $8.4 billion iShares Physical Gold ETC (IGLN LN), the $7.6bn Invesco Physical Gold ETC (SGLD LN) and the $7.2bn WisdomTree Physical Gold (PHAU LN).
The joint cheapest of these are the iShares and Invesco products at 0.19%.
The Royal Mint follows Australia’s Perth Mint, a wholly-owned subsidiary of the Government of Western Australia, which launched an exchange-traded fund in 2018. Its fund, the Perth Mint Physical Gold ETF (AAAU US), was brought to market in partnership with US white-label ETF issuer Exchange Traded Concepts and holds approximately $200m in assets.