Investment management firm FinEx Group and the Moscow Exchange said they had launched Russia’s first gold-backed exchange-traded fund as part of a bid to turn Moscow into an international financial centre.
The FinEx Physically Held Gold ETF fund, which has been listed on the Irish Stock Exchange and cross-listed on the Moscow Exchange, tracks the gold price as calculated using the London Gold Fixing Price, FinEx said.
Shares will be available in U.S. dollars and rubles, it added.
“Our research shows there is substantial appetite among investors for gold now and going forwards. We anticipate significant demand for this product, especially in Russia,” Simon Luhr, chief executive of London-based FinEx Capital Management, said in a statement Thursday.
ETFs, which issue securities backed by physical gold, give investors exposure to the underlying asset price without having to take delivery of physical metal and have proved a popular way to invest in gold since they were launched a decade ago.
This year, however, as gold prices have dropped nearly 25 percent in their first down year in more than a decade, investors have been selling holdings in gold ETFs.
Holdings of the largest, New York-listed SPDR Gold Trust, fell 3.6 tons to 885.53 tons Wednesday, a 4 1/2 year low and some 35 percent below their December 2012 peak. The fund’s outflows have amounted to more than 400 tons this year.
The latest report by metals consultancy Thomson Reuters GFMS suggests that bullion prices are likely to decline further in 2014. The latest Reuters poll also suggests gold prices will drop in 2014.
The Moscow Exchange’s chief executive, Alexander Afanasiyev, said he sees the development of precious metals trading as a promising new direction for its business. The bourse also plans to launch spot trading in gold and silver this month.
Russia’s over-the-counter market in gold is currently dominated by large banks such as Sberbank and VTB. The Moscow Exchange expects banks and brokers to participate initially in spot trading in gold and silver.