Global gold-backed ETF grew in 2018
Holdings in global gold-backed ETFs and similar products rose by 69 tonnes (t) to 2,440t in 2018, equivalent to US$3.4bn of inflows. Global gold-backed ETFs grew 3% in 2018, driven by strong growth in European funds and increased global inflows during December.** This is the first time since 2012 that the value of total gold-backed ETF holdings has finished the year above US$100bn.
2018 Regional flows shows, holdings in European funds rose by 96.8t (US$4.5bn, 10%) while North American funds saw outflows of 13.4t (US$667mn, 1.3% AUM). Funds listed in Asia lost total assets of 4.7t and had outflows of US$69mn** and other regions lost 9.7t (US$393mn, 29%).
At Individual flows front Xtrackers Physical Gold in Germany led global inflows, adding 46t (US$1.9bn) and growing 295% on the year and iShares Gold Trust led North American inflows with 36.7t (US$1.6bn, 16%). SPDR Gold Shares led global outflows, losing 49.8t (US$1.8bn, 5%), while the Central Fund of Canada lost 9t (US$ 890mn) or 41% of its assets.
In Asia, Chinese-listed Huaan Yiffu added 7.7t (US$315mn, 40%), whereas the collective holdings of the three Bosera funds fell 12.8t or US$460mn. NewGold in South Africa lost 11.1t (US$454mn, 36%). The country’s base currency fell 16%, elevating gold returns for South African investors who likely took profits following a double-digit local gain.
**Note: We calculate gold-backed ETF flows both in ounces/tonnes of gold as well as in US dollars because these two metrics are relevant to understand the performance of the funds. The change in tonnes gives a direct measure of how holdings evolve, while the dollar value of flows is a finance industry standard that gives a perspective of how much investment is reaching the funds.
This month, the reported flows measured in tonnes of gold and their dollar value equivalent seems inconsistent across regions. Both figures are correct. The difference is the result of the interaction between the performance of the gold price intra-month, the direction of the dollar, and the timing of the flows. For example, Europe experienced outflows early in the month when the price of gold was low but gained assets later in month when the price of gold increased.
***Low-cost US-based gold backed ETFs are defined as gold-backed ETFs, trading on US markets that have annual management fees of 20bps or less.