Industry Updates

Gold ETCs see outflows as investors turn risk-on

VZLD saw $627.2m outflows last week

George Geddes

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Gold exchange-traded products (ETPs) saw the highest outflows across all European-listed ETFs last week as investors rotated into risk assets such as equities amid positive news surrounding multiple coronavirus vaccines.

According to data from ETFLogic, the $7.5bn WisdomTree Physical Gold ETC (PHAU) saw $627m outflows in the week to 20 November, the most across all ETFs listed in Europe, just under 10% of its overall assets under management (AUM).

Meanwhile, the $14.5bn iShares Physical Gold ETC (SGLN) lost $375m last week while investors pulled $134m from Europe's joint-cheapest gold ETP, the $3.5bn Amundi Physical Gold ETC (GOLD).

The inflows come after the news of 90+% effective coronavirus vaccines being found by Pfizer, Oxford University and Moderna resulting in increasingly bullish investor sentiment.

Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence, commented: “These gold ETP outflows appear to be investors freeing up capital to pile into equities as they turn risk-on.

“They have lagged most the year but really seeing a spiel in equity flows since the vaccine announcement.”

Investors move away from gold ETPs as equities gain momentum

According to the World Gold Council, global gold ETPs have seen 11 consecutive months of inflows with Europe being the key driver behind them.

There are 32 ETPs listed in Europe with a total of $97.3bn AUM which means there is a large volume of assets that could be reallocated. 

Global gold ETP holdings have expanded 42% on average every year since 2003.

There does remain a level of uncertainty surrounding market recovery as a result of the vaccine and interest rates remain low which could go in favour of gold-backed ETPs or other uncorrelated products. 

Psarofagis highlighted the significantly large inflows into bitcoin ETPs as the price of the digital asset approaches record highs.

Bitcoin has climbed 155.9% year-to-date, surpassing $18,500 in value and ETPs with the exposure are seeing record inflows.

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