Asia Pacific's family offices are a nimble bunch and never more so than when it comes to ESG where they're already proving to be ahead of the regulators.
First conceived and traded on the New York Stock Exchange on November 18, 2004, SPDR Gold Shares was the worldÆs first commodity ETF. In its first three days of trading, it had reportedly attracted $1 billion of assets. In the three-and-a-half years since, the fund had kick started a wave of investor interest in commodity ETFs.
According to the latest estimates by Jude Brhanavan, a commodity strategist at Deutsche Bank in London, the sector has since witnessed a tremendous boom with total asset under management growing from $4.2 billion in 2005 to approximately $53.7 billion worldwide this year, of which $21.8 billion is attributed to the SPDR Gold Shares Fund.
The Hong Kong listing will add to the number of exchanges worldwide on which the fund is traded. Previously, State Street has also listed SPDR Gold Trust on the Bolsa Mexicana de Valores, the Singapore Exchange and Tokyo Stock Exchange.
Sammy Yip, vice-president and head of ETF at State Street in Hong Kong, says Asia is at a tipping point to witness the exponential growth in the ETF sector. SPDR Gold Shares will bring to investors a convenient and innovative way of investing in physical gold. It will give investors ôinstitutional accessö at the convenience on a retail level, he says.
Investors should note, however, at 40 basis points a year, the fund charges a slightly higher expense rate than the typical stock ETF, which currently average about 9bp. Furthermore, Deutsche's Brhanavan believes recent trends suggest commodity investors might be shifting their focus to other sectors in energy and agriculture.
Yet, on an overall access level, he notes ETFs still offer significant advantages.
ôOne common feature of the gold and silver market is that the forward curves are almost always in contango. We find that the degree of cantango is considerably higher than the storage, insurance and management fees charged by ETFs,ö says Brhanavan. ôPhysically backed precious metals ETFs avert the carry costs associated with commodities that have upward sloping forward curves.ö
Albert Cheng, managing director at World Gold Council, says gold has historically always offered a good hedge against inflation. On a supply-demand dynamic level, he suggests under-investment in the mining sector over the past decade has now resulted in some of the tightest supply in history.
Over the coming years, he says emerging market demands for gold in industrial and jewellery will drive spot prices even further.
Michael Lewis, Deutsche BankÆs global head of commodities research in London, notes the current cycle has been the longest gold price rally in history. It has been running for 84 months since April 2001. The previous longest boom was recorded between August 1971 and February 1975. It lasted 42 months and gold prices climbed 419% to a high of $183.9/oz.
In the current cycle, gold prices have climbed from a low of $255.6/oz to $1003/oz, or 292%, thus far.
So far so good. However, Lewis notes, the close link between dollar and gold means any major turn in the US currency could end this longest rally in the gold price known to man.
The Australian superannuation fund is continuing its journey to invest in scalable affordable housing projects under its sustainable cities sustainable development goal (SDG).
ESG adoption among institutional and wholesale investors in Asia-pacific is not just a passing fad and is being driven by client demand, says a new study from Capital Group.
Few ESG disclosures, inconsistencies in ESG practices, and the lack of on-the-ground specialist teams all lead to hurdles for investors.
Investors are bringing an ESG focus to opportunities, while being aware that this does not mean an automatic boost to returns.