Investors in Europe have piled more than US$1.4 billion of net new assets into gold exchange-traded products so far this year, with Invesco Physical Gold ETC seeing the greatest flow with an increase of US$524 million of assets. Investors now hold more than ever in gold products listed in Europe, roughly double since December 2015, when gold was at its lowest price in almost a decade.
The firm believes this flight to perceived safety is evidence that investors in Europe are positioning their portfolios more defensively amid political and economic uncertainty.
Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco, explained, “Gold is often used for portfolio diversification, due to its low correlation with equities, and it can also appeal to investors who want to take a more defensive stance during times of market stress. We believe many investors are now de-risking their portfolios and buying gold ETCs in case equity markets become more volatile as details of Brexit unfold.”
The flows into Invesco Physical Gold ETC represent a more than 10% increase in the product’s assets from the beginning of the year. This continues a trend that started 18 December 2018, when Invesco reduced the fixed fee on the product to 0.24%, from 0.29%. Since then, it has recorded net new assets of US$805 million, over US$300 million more than any of its competitors in Europe.
Tom Digby, Head of EMEA ETF Client Trading at Invesco, said, “We know from our dialogue with market participants that recent activity in our gold ETC has been from a broad range of asset managers, wealth managers and private banks across Europe. The choice of one product over another generally comes down to the overall cost the investor would expect to pay from the time they purchase to when they sell. Our gold ETC typically trades with a bid-offer spread of around three basis points, which together with one of the lowest fixed fees in Europe, offers investors the lowest total cost in Europe.”
The Invesco Physical Gold ETC is part of a range of core building blocks, designed to provide low cost exposure to equity, fixed income and commodity benchmarks. They complement the firm’s more innovative ETFs to provide investors with greater choice from which to build “better” portfolios.