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Newly Minted Asian Gold ETFs Buck Outflow Trend


Bullion ETFs listed in the U.S. and other Western countries have seen significant outflows this year as gold prices plunge, but investors in their newer Asian counterparts are standing pat.

The contradictory responses to the 20% pullback in gold prices “show a growing appetite for gold funds in Asia and provide hope for a fledgling funds industry that has struggled to attract investors,” Reuters reports.

A net $33.5 million was added to Asian gold and precious metals miners’ funds in the three months to June, while similar funds in the West over the same period experienced net outflows of about $18 billion, or roughly 11% of their assets. SPDR Gold Shares (GLD) is the largest U.S.-listed bullion ETF with nearly $40 billion in assets under management, down sharply this year due to outflows and gold’s correction.

“It’s more about the mentality,” said William Chow, managing director of Value Partners Group’s ETF business, in the article. “Asian risk appetite for gold is more stable than that of U.S. investors.”

For example, bullion-backed ETFs listed around the globe saw redemptions of nearly $19 billion in the second quarter. However, a gold ETF listed in Japan has grown this year. [Japan Gold ETF Resists Outflow]

Gold ETFs have also been listed on exchanges in Hong Kong and Shanghai. [China’s First Gold ETFs]

Asia has strong demand for physical gold, but now investors are getting ETFs to trade the precious metal.

“The trend of shifting from physical to gold ETFs is just beginning,” said Tanawat Roongtanapirom, a fund manager at Kasikorn Asset Management, in the Reuters story.

“Increasingly, we see investors turning to ETFs as a way to gain immediate access to entry and exit,” added Siyi Lim, an ETF analyst at OCBC Investment Research.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.