Perth Mint launches first gold-backed ETF on NYSE

The Perth Mint, Australia’s largest precious metals refinery, depository and mint, on Wednesday announced a new gold-backed exchange-traded fund (ETF) with a low-price management fee, entering the field of lower-cost competitors on the New York Stock Exchange.

The new fund, which will trade under the ticker symbol AAAU, will charge a fee of 18 basis points, or 0.18 percent of the value of an investment, said Perth Mint Chief Executive Richard Hayes.

To reduce tracking error, Hayes said the management fee will be charged in ounces at the time of production rather than in dollars after the fee is converted.

The Perth Mint’s new ETF will be backed by physical gold and will give investors the option to take physical delivery from its gold products. The ETF will also be guaranteed by the government of Western Australia, Hayes said.

In the new fund, 100 shares will represent an allocation of one ounce of physical gold, according to the Perth Mint’s ETF calculator.

The Perth Mint hopes to gain market share in a field where newly favored robo-advisers tend to choose lower-cost ETF options for investments. However, robo-advisers were not a main factor in pricing, Hayes said.

“Clearly the opportunity to launch an ETF broadened the appeal of precious metals to a wider audience, and one of the things the Perth Mint thought to do is find new markets to new demographics and the ETFs were really a good fit for that,” Hayes said.

The move follows that of the World Gold Council, owner of the world’s largest gold-backed ETF, which recently launched a low-cost fund also charging 18 basis points.

The Perth Mint has other ETF products planned, but Hayes said he was not at liberty to share details.

(Reporting by Renita D. Young; editing by Jonathan Oatis)