Martin Lee @ Sg
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Gold SGD Hedged Exchange Traded Commodities and its Risks

db-X ETC (Exchange Traded Commodity) has listed the World’s first Gold ETC hedged in SGD on the London Stock Exchange.

As the product is hedged in SGD, an investor will be able to get exposure to any full potential upside (or downside) in percentage terms of the underlying gold (net of fees).

If you are not familiar with Exchange Traded Commodities (ETC), you can refer to this guide:

ETC Brochure by London Stock Exchange

But before you even consider investing in such a product, you should know the difference between a ETF, ETP and ETC and understand the risks behind them.

What is the Difference between an ETF and an ETP? (Part 1)

The Difference between an ETF and an ETP (Part 2)

Understanding Exchange-Traded Commodities & Notes

Features of Gold ETC hedged in SGD

  • Linked to the spot performance of gold (less fees)
  • Forex Hedged – Daily Forex hedged to minimize the SGD/USD exchange rate risk
  • Backed by gold
  • Liquid – Traded in USD in London with Deutsche Bank as the dedicated market maker
  • Transparent – NAV published daily

Management fee: 0.29% p.a.
FX hedging fee: 0.40% p.a.
Bloomberg/Reuters Code: XGLI LN / XGLI.L
Trading Currency: USD

The product factsheet can be found here: db Physical Gold SGD Hedged ETC

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3 comments
Ivan Guan says 7 years ago

This ETC is only for institution investors.

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Ivan Guan says 7 years ago

Investors should note this ETC is only for institutional clients, and the hedging method is tricky.

Reply
Norman Tsai says 7 years ago

Hi,

Please do take note that for this particular ETC, although it is stated that it is backed by gold, settlement of the ETC will be in CASH. This is stated in the last line of the product fact sheet under “Physical Replication”.

This means that investors are NOT able to receive physical gold as settlement.

If one is looking into this ETC for pure cash gains, this will be a non-issue.

However, should one be looking for the protection that physical gold offers against fiat currencies defaulting, this is an issue and one is better off buying physical gold direct.

Thank you for reading.

Cheers 🙂

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