State Street launches low-cost gold fund backed by ANZ Private

State Street Global Advisors (SSGA) has launched a new low-cost managed fund centred around gold, supported by an inaugural allocation to gold from ANZ Private.

The State Street Gold Fund will generate returns by tracking the performance of the LBMA Gold Price in Australian dollars and investing in securities backed by physical gold bullion held in vaults in London, New York and Zurich.

According to SSGA, the unlisted managed fund’s 0.14 per cent p.a. management fee makes it the most cost-effective gold fund domiciled in Australia.

Available to institutional and retail investors, as well as advisers and platforms, the fund also cements SSGA’s strategic relationship with the World Gold Council.

“Gold has never gone away as a diversifying allocation of an investment portfolio, but today’s heightened climate of economic and geopolitical uncertainty has brought its role to the fore,” SSGA’s Head of Investments in Australia, Jonathan Shead, said.

“Investors tend to use gold as a potential hedge against market volatility and for its potential diversification benefits when included in a traditional portfolio of equity and fixed income assets.

“Through this new unlisted fund, Australian investors will have cost effective access to gold with potential benefits of diversification, and hedging against risk and inflation.

“The fund joins our existing range of unlisted managed funds and SPDR ETFs, confirming our commitment to providing Australian investors with cost effective solutions across all asset classes.”

ANZ Private Bank’s Chief Investment Officer, Lakshman Anantakrishnan, said ANZ’s debut allocation to gold through the SSGA fund aligns with its refreshed multi-asset strategy.

“Typically, rising real yields and a strong dollar spell trouble for the precious metal, but safe haven demand is rising, and some governments and central banks are looking to diversify their reserve assets away from the dollar,” he said.

“For investors, the asset class can play a similar role during periods of uncertainty, helping add diversification to portfolios given its  historically low or negative correlation to most other asset classes.”

The fund launch comes as gold remains a popular investment choice as a hedge against inflation and the exchange traded fund (ETF) model leveraged by SSGA continues to dominate investor preference.