ETF Securities expects assets under management in its gold exchange-traded commodity (ETC), ETFS Physical Gold, to quadruple in Australia from $500 million to about $2 billion over the next 12 months.
"Our experience from the UK is that it can go suddenly very fast," ETF Securities Australia and New Zealand head of sales Nigel Phelan told InvestorDaily.
Phelan has overseen the growth of the ETF business in the UK and Ireland, where assets grew from $200 million to more than $11 billion in just two years.
"I think we're actually being conservative," he said.
The ETC gives investors exposure to gold through an equity structure, while the securities are backed by actual gold bullion held by custodian HSBC.
Interest in the product might be stimulated by the current rise in the gold price, with futures recently topping US$1000 an ounce.
Globally, gold ETCs have attracted US$2.25 billion of net inflows since early November 2008, which brings the total assets under management in this product to US$8 billion.
"Physically-backed gold ETCs have seen strong flows over the past year as investors look for insurance against financial and economic dislocation," UK-based ETF Securities senior analyst Daniel Wills said in a conference call yesterday.
"Gold was one of the only assets to show positive returns last year when the financial crisis hit, highlighting gold's status as a safe haven and as insurance against unexpected severe events for long-term portfolios," Wills said.
The boost in assets under management in the gold ETF in Australia will be helped by ETF Securities' efforts to make the products available to retail investors.
Last week, Zenith Investment Partners gave the product a recommended rating.
This clears the way for the gold ETC to be included on platforms and subsequently on dealer groups' approved product lists.
