October 21, 2010

ETF Securities' Precious New Fund: All That GLTRs Is Not Just Gold

New ETF to offer gold, silver, platinum, palladium in a single ticker solution

ETF Securities on Friday will launch a new exchange traded fund that offers a diversified portfolio of precious metals—gold, silver, platinum and palladium—under the ticker symbol GLTR, or “Glitter.”

The London-based ETF firm’s ETFS Physical Precious Metal Basket Shares fund is designed to appeal to financial advisors looking for a “one size fits all” exchange traded portfolio, according to company officials. The sponsor’s fee for GLTR will be 0.60%.

It is expected that the transaction costs for buying and selling the shares will be lower than purchasing, storing, and insuring physical gold, silver, platinum and palladium, the company announced in a news release on Thursday.

The shares will trade on the NYSE Arca. The trust structure allows for shares to be created and redeemed according to supply and demand in the market. The gold, silver, platinum, and palladium bullion held by the trust is inspected biannually by independent metal assayer Inspectorate International.

The pricing information, net asset value, and precious metals bar numbers held by the trust will be published daily on www.etfsecurities.com.

“This is a precious metals basket—it’s one ETF which holds a diversified portfolio of the four main precious metals, which are gold, silver, platinum, and palladium,” said William Rhind, New York-based strategic director of U.S. business development for ETF Securities USA, in a phone interview. “The advisor buys one share and gets diversified exposure to the whole precious metals exposure. There’s nothing like this available in the U.S. market currently. The only option is single precious metals. At last, financial advisors have a solution to their precious metals exposure.”

Although portfolio holdings of precious metals and other commodities are now a hot topic in the markets, the timing is purely coincidental for the launch of ETFS Physical Precious Metal Basket Shares, Rhind asserted.

“We’ve had this in filing for a long time, since almost the beginning of the year,” he said. “It just so happens that we have now cleared the registration process. We launched a gold ETF and a silver ETF last year, and we launched a platinum and a palladium ETF in the beginning of this year.”

Ron DeLegge, editor of ETF Guide, said the new offering is interesting because it addresses two different investment goals.

“A lot of focus has been on precious metals,” DeLegge said. “You could make the argument that people should own it not just from a safe money perspective, if you don’t trust currency, which a lot of people don’t these days, but from the perspective of ‘I’m bullish on the industrial applications.’ Look at all the hand-held mobile devices—iPhones, iPads, e-this, and e-that. The materials within that little device contain some of these very materials. There are also medical applications.”

The ETFS Physical Precious Metal Basket Shares fund Advisors is a way for advisors to reduce their exposure to stocks and bonds, DeLegge added.

“I think it’s a cool offering,” he said. “Their proposition here is to own the physical asset in equal proportion, and I think that’s cool. If you believe that precious metals are heading higher, but you’re not sure which ones are heading higher, this is a nicely diversified way to do it.”

Read about ETF Securities’ William Rhind’s thoughts on the surging interest in gold shares at AdvisorOne.com.

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