Foreign investment in gold-backed ETF hits 99.6 per cent

Foreign transactions in gold-backed Exchange Traded Funds (ETFs) grew by 99.64 per cent, as 10 stockbrokers drove 99.9 per cent of total transaction value and 97.3 per cent of total volumes of ETFs in the second quarter (Q2) of 2021.

The NGX quarterly report for Q2 2021 as of June 30, 2021, revealed that NewGold emerged as the most active ETF with its value rising by 99.6 per cent to N4.41 billion, taking the lead in both value and volume traded in the ETF space.

The stock traded 524.241 units valued at N4.41billion. Vetiva Griffin 30 was next, trading 501,48 units worth N8.12 million, Vetiva Industrial Goods transacted 248,469 units worth N4.52 million, Meristem Value ETF sold 115,58 units valued at N1.87 million, while Stanbic IBTC ETF traded 19,774 units valued at N1.48 million.

The NewGold ETF is one of the simplest and most cost-efficient methods for investors to invest directly in physical gold.

Analysis of the report showed that Rencap led in terms of brokers’ performance in value terms, retaining its top position in this category, having traded about 69.7 per cent. RMB followed, accounting for 12.72 per cent, while ABSA Securities accounted for 9.04 per cent of transactions.

On the other hand, Vetiva led in terms of volume, accounting for 31.55 per cent in the period under review. Rencap followed with 24.9 per cent while IONE accounted for 14.66 per cent volume of transactions.

However, market capitalisation declined by a record 39.7 per cent between both quarters as the commodity-backed ETF suffered net outflows of 54 per cent, from N12.0 billion in Q1 2021 to N5.5 billion in Q2 2021, due to FX restrictions in the regulatory climate.

Furthermore, trade volumes fell by approximately 69 per cent from about 5.3 million units in Q2 2020 to 1.6 million units in Q2 2021.

Investors, however, remain positive on the gold-backed ETF as well as diversifying their investment portfolios with listed ETFs giving exposure to the NGX 30 index.