Gold ETF market has plenty of room for more choice - Wilshire Phoenix
William Cai, partner at Wilshire Phoenix, said that although gold is in a consolidation period with risk of further retracement, he is optimistic that prices can continue to push higher in the long-term.
“The overall drivers in the gold market that people have been talking about are still here,” he said.
The comments come as Wilshire Phoenix looks to launch its first investment product, a physical gold exchange traded product. Cai said that he can’t say much about the ETF as they are currently in a blackout period as the Securities Exchange Commission reviews the application.
Cai said that if the review is successful, the company hopes to launch the new ETF before the end of the year.
Before creating Wilshire Phoenix with his partners, Cai was a commodity trader at JPMorgan Chase, where he created trading strategies to allow institutional clients likes endowments and pensions funds greater access to commodities.
He added that their plan is to bring that focus now to retail investors in the ETF market.
“Gold will be the first product we will create for investors,” he said. “We want to help retail investors navigate the volatility in the marketplace. We like to think of gold not as a trading instrument but as a stable position in your portfolio.”
The question now is how the market will adjust to the idea of a new gold ETF product. Currently, the World Gold Council (WGC) tracks 125 globally listed ETF products.
Cai said that he thinks there is still room for another gold ETF.
“Given how much inflows we have seen this year, there is an incredible appetite for gold,” he said. “The key though is for new ETF to offer investors real innovation in the marketplace.”
According to the latest data from the WGC, the gold market has seen nearly 1,000 tonnes of gold flow into ETFs around the world, valued at more than $54 billion. Investment demand into ETFs are up more than 22% so far this year.
Cai said that he expects to see investment demand continue to grow as investors continue to see the value in holding the safe-haven asset.
“In the last few years investors didn’t see the need to hold much gold because equities just kept going up,” he said. However, as risk comes back into the marketplace and equity market volatility picks up, investors realize the need for gold as an effective portfolio hedger and diversifier in the short-term and for the long-haul, Cai said.