GAM Unit Plans Physical Base Metals ETFs (ZURICH)
GAM Holding (GAMH.VX) unit Swiss and Global Asset Management (S&G) plans to list some of the first physically-backed base metals exchange traded funds by the end of the year, a source close to the asset manager said.
The ETFs, to be listed on the Swiss exchange, will buy physical quantities of copper, zinc, aluminium and nickel to gain exposure to spot market prices rather than futures contracts, where prices can diverge sharply from spot prices, the source said.
As a result of this divergence, asset managers say, commodities ETF investors can find their returns vary widely from those of the underlying commodity.
There is mounting interest in base metals among investors as copper, for example, more than doubled in price last year.
Glencore International, the world’s biggest commodity trader, and Credit Suisse (CSGN.VX) were in advanced talks in September last year on creating the world’s first physically backed aluminium exchange traded fund (ETF).
The source said the S&G products still had to go through the approval process, but could come onto the market some time in 2010. S&G also needs to organise transport and storage facilities for the metals.
“We cannot make any statements concerning our pipeline, we would want to inform all market participants at the same time,” said S&G product manager Stephan Mueller.
S&G was combined with hedge funds group GAM to form GAM Holding, which was split off from former owner Julius Baer (BAER.VX) in October and listed as a separate company.
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