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Storage and high costs will hamper physically-backed base metals ETF, says market
January 22, 2010 - 10:24 GMT
physically backed etf
High fees and logistical issues such as storage will increase the costs of investing in a physically-backed base metals exchange-traded fund (ETF) and hamper financial institutions’ efforts to launch one, according to market participants
Traders and analysts are expecting banks to ride on the coat
tails of the successful physically-backed ETFs in precious
metals amid mounting speculation that they will try to launch
similar products using industrial metals, such as copper. The
market is also particularly exercised by the prospect of a
physically-backed aluminium ETF planned by Credit Suisse and
Glencore. "There are loads of banks talking about it.
It’s the natural evolution that
you’ll have a copper ETF," an executive at a
category IV London Metal Exchange member told MB. Others agreed
that banks are considering following in Credit
Suisse/Glencore’s footsteps. "I think
we’ll see [banks] try to roll out across all
metals," a London analyst said. The first sign of a financial
institution launching a physically-backed ETF came on Thursday
when GAM Holding, a unit of Swiss and Global Asset Management
(S&G), was reported to be planning to list
physically-backed base metals...
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