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BetaShares launches hedged gold ETF

Vishal Teckchandani  |  05 May 2011Text size  Decrease  Increase  |  

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Vishal Teckchandani is a journalist with InvestorDaily, a Morningstar publication.

 

BetaShares Capital has launched an Australian dollar hedged gold bullion exchange-traded fund (ETF) on the local market.

The product will offer pure exposure to the precious metal, but without the currency risk and can be traded just as easily as any share, the company's head of investment strategy and distribution Drew Corbett said.

He said the Australian dollar's rally against the greenback in recent times had negatively impacted returns from gold ETFs.

In the last 10 years, investors in hedged gold made almost 5 per cent more each year than those who put their money in unhedged gold, Corbett said.

The gold price in US dollars jumped 33 per cent annually in the two years to April 2011, outpacing the S&P/ASX 200's 18 per cent yearly gain.

"Physical gold has delivered exceptional returns over the past decade as investors flocked to safe-haven assets in volatile markets," Corbett said.

"In addition to the potential for strong investment returns and its ability to act as a hedge against inflation, gold's low correlation with other asset classes makes it a strong addition to a diversified portfolio for investors. A hedged gold ETF is the most pure and simple way of gaining exposure to movements in the price of gold," he added.

Morningstar Australia co-head of research Tim Murphy said the BetaShares gold product was the first Australian dollar hedged gold ETF to be listed on the Australian Securities Exchange.

He said the BetaShares fund's management expense ratio of 0.49 per cent is 10 basis points higher than rival ETF Securities product, which is an unhedged physical gold ETF.