Why invest in gold?

For centuries, gold has been considered as a store of value and a natural currency. Gold cannot be printed and the supply of gold is in shortage in recent years, highlighting the bullion’s scarcity. The major central banks have been injecting liquidity to the market , deteriorating the value of banknotes and eventually purchasing power. On the contrary, gold is embraced with its precious value, which shines to combat inflation. In fact, gold price has been on its upward trend, up a total of 50% in the past 5 years, outrunning the 8% - 12% inflation rate over the same period. 

While geopolitical risks sustained, gold stands out as one of the important safe-haven assets. Looking back at the past financial crises, gold, with a low correlation to other assets, saw price resilience and outperformed the stock market and major commodities. 

It shows that gold is a tool that can effectively diversify the risks of the investment portfolio in long-term. Amid the low rate environment and geopolitical volatility, gold shall continue to be the essential choice for long-term risk aversion and value preservation against the inflation.

Why invest in a gold ETF?

A gold exchange-traded fund ("ETF") is an investment product listed on a securities exchange, usually in the form of a trust or mutual fund whose main purpose is to track the price of gold. Gold ETFs are intended to enhance trading liquidity so investors can buy and sell gold ETF units on an intraday basis on the relevant exchanges. Gold ETFs are also designed to reduce security and other costs associated with the storage of physical gold bars. As each gold ETF share or unit is backed by a certain amount of physical gold held by the ETF custodian, investing in gold ETF is similar to holding physical gold directly and thereby gives investors the exposure to gold in a convenient and cost-effective manner.

What are the distinguishing features of Value Gold
ETF ("The Trust")?

1 The market’s only gold ETF with physical depot in Hong Kong

• Value Gold ETF’s gold storage is located in the HKIA Precious Metals Depository . The arrangement minimizes the geopolitical risks to physical gold

2 Affordability

• As of 30 September 2024, one lot of 100 share of Value Gold ETF costs around HKD6,254, the lowest entrance fee in the market. This allows investors to buy gold to diversify risk and capture gold’s potential growth with a lower cost

3 Closely keep track on gold price

• Value Gold ETF tracks the LBMA Gold AM performance which we aim to closely track in the ETF
• The one-year tracking error is only 0.02%, which can closely keep track on the gold performance

4 Flexibility and transparency

• Unit trading is executed in the SEHK, similar to regular stocks, which is convenient and flexible
• Price, net asset value (NAV) and the amount of gold storage are disclosed daily on the website
• The fee structure is simple – an all-inclusive Total Expense Ratio of up to 0.4% of NAV per annum

5 HKD, RMB and USD  trading counters

• The world’s first gold ETF to provide trading counters of HKD, RMB and USD, bringing convenience to investors holding different currencies

• The Trust is managed by Sensible Asset Management Hong Kong Ltd (the “Manager"), a wholly owned subsidiary of Value Partners Group Limited.

Who is the Participating Dealer?

The latest list of the Participating Dealers is available here.

Who is the Metal Provider?

Standard Chartered Bank and Heraeus Metals Hong Kong Limited are currently the Metal Provider.

The role of Metal Provider is to supply bullion (manufactured by approved refiners which are included in the LBMA Good Delivery List of Acceptable Refiners: Gold) with a minimum fineness of 99.5% gold. If a Participating Dealer has any dispute as to the quality of gold sold to it by the Metal Provider, the Participating Dealer will be entitled to claim against the Metal Provider.

Are the Value Gold ETF backed by physical gold?

Yes. The Trust may only invest in physical gold held in its name on a fully-allocated basis. The Trust may hold a small amount of cash to pay expenses. It may not lend the gold out and may not borrow.

Where is the Value Gold ETF's gold held?

All gold bullion deposited with the Trust is securely stored at the Hong Kong vaults of the Custodian.

Why store gold in Hong Kong?

Hong Kong is an international financial centre with first-class services and a financial platform that serves investors in Asia and other time zones. The Hong Kong International Airport is regarded as one of the most efficient and accessible traffic hub in the region, making this a cost effective location for gold storage.

Is the Trust's gold insured?

The Trustee and the Manager will not arrange insurance for the Bullion held by the Trust. However, the Custodian, which holds all the bullion deposited with the Trust, generally maintains insurance at its own expense with regard to its business and on terms and conditions that it considers reasonable and appropriate. The Custodian regularly reviews the insurance coverage with respect to the vault and considers the current insurance coverage sufficient and appropriate, given the exposure, security installations and risk management the Custodian have in place. The current policy does not necessarily cover all bullions that may be deposited at the Custodian's vault.

Is Value Gold ETF's gold 'allocated'?

All bullion deposited with the Trust is securely held by the Custodian and is held on a fully “allocated” basis. The Trust has opened an account with the Custodian under the Trust's name, in which the Trust holds uniquely identifiable gold bullion bars that are “allocated” to the Trust. Gold bullion of the Trust is stored in the Custodian's vault but are securely segregated from gold and precious metals that are also in the vault but are owned by other people. All gold bullion stored by the Custodian is clearly identifiable through the refiner's brand and unique serial number. The Trust has full title to all gold bullion held in its name with the Custodian. All Participating Dealers, Metal Providers and the Trust have accounts with the Custodian.

What type of bullion is held by Value Gold ETF?

The Trustee only accepts gold in the form of bars or ingots (from approved refiners which are included in the LBMA Good Delivery List of Acceptable Refiners: Gold) with a minimum fineness of 99.5% gold.

What are 'London Good Delivery Bars'?

London Good Delivery Bars' refers to bullion made by gold melters and assayers that are accredited by London Bullion Market Association (“LBMA”). They meet specifications set out in the LBMA-issued Good Delivery Rules, which includes weight, dimensions, fineness, identifying marks (including the assay stamp of a LBMA acceptable refiner) and appearance for bullion. Trading unit of gold in London is troy ounce, whose conversion between grams is: 1,000 grams = 32.1507465 troy ounces and one troy ounce = 31.1034768 grams.

London Good Delivery Bar is typically referred as 400 ounce bar as it must contain between 350 and 430 troy ounces of fine gold, with a minimum fineness of 99.5%, be of good appearance and be easy to handle and stack. The fine gold content of a gold bar is calculated by multiplying the gross weight of the bar (expressed in units of 0.025 troy ounces) by the fineness of the bar. A London Good Delivery Bar must also bear the stamp of one of the melters and assayers who are on the LBMA approved list.

How do I exchange my gold for units or units for gold?

Most investors are likely to sell units of the Trust directly on the exchange rather than redeem those units for physical gold and then sell the gold as this is a more cost effective way. Similarly, most investors are likely to buy units of the Trust directly on the exchange, rather than acquiring physical gold and then selling that to Metal Providers who will, in turn, create units for investors to subscribe through Participating Dealers. However, investors in the Trust may exchange their gold for Units or their Units for gold, subject to conditions of the Trust and agreement between the investors and Participating Dealer.

Only a Participating Dealer can create and redeem units directly with the Trust, either on its own account or for the account of investors which are its clients. Units can be created and redeemed by in-gold creation and in-gold redemption at the issue price and redemption value, respectively, through Participating Dealers with a minimum number of 300,000 units (and multiples thereof).

How does an investor buy and sell units in the Trust?

Units of the Trust are traded on the Hong Kong Stock Exchange and may be bought and sold by investors through their existing stockbrokers or through any of the share dealing services offered by banks or other financial advisers at any time the Hong Kong Stock Exchange is open. Units of the Trust are quoted in Hong Kong dollars/ Renminbi/ United States dollars per unit and are traded in minimum board lots of 100 units (or multiples thereof) like an ordinary listed stock.