Invesco has launched a sterling-hedged version of its physical gold ETC in response to “record” demand.
According to the firm, the precious metal has been the most sought-after asset in Europe over the first half of the year, with physical gold ETPs drawing in $12.5 billion (€11 billion) of net inflows.
The Invesco Physical Gold GBP Hedged ETC is designed to track the performance of the price of gold, minimising currency risk with a daily hedging mechanism.
The UK fund manager highlighted how currency fluctuations can have a material impact on investments. Quoted in US dollars, the gold price has risen by 16.7% over the first six months of 2020, but is up by 23.7% over the same period when converted to pounds sterling, Invesco said.
Investments in the strategy are used to buy physical bars of gold bullion which are held in an allocated account and stored in the London vaults of JP Morgan Chase Bank.
The ETC uses a “swing bar” method, meaning it holds gold bars of at least the full value of the assets invested.
Record demand for gold, often perceived as a safe-haven asset, is being driven primarily by the uncertainty over the Covid-19 pandemic’s impact on the global economy.
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