Gold ETF does the splits

Exchange traded fund provider ETF Securities is conducting a 10:1 share split on its $2.6 billion ETFS Physical Gold product (ASX: GOLD).

The split, which happened on June 8, will see owners of GOLD receive nine additional shares for each share they hold. Correspondingly, the metal entitlement of each share will be reduced by a factor of 10.

The metal entitlement reduction means there will be no net impact on the value of GOLD holders’ investments.

At the time of writing, GOLD was trading above $230 a share, which is one of the highest prices in the Australian ETP market.

The post-split price will be between $20 and $30, which ETF Securities says is far more common for ETPs.

Evan Metcalf, head of product at ETF Securities, says a number of investors felt the share price of GOLD was prohibitively high.

“We are conducting this split in response to this feedback. The split will let smaller investors buy GOLD more freely. The current price per share can be challenging for smaller investors. The lower prices will also allow investors to manage their portfolios with greater precision.”

Marc Jocum, senior manager at the investing platform Stockspot, welcomed the split.

“Since we started investing in GOLD in 2014, its price has risen from $130 to $240, which has made it difficult to buy in the perfect allocation for some smaller client portfolios.

“We see the split as beneficial for our clients, as it should improve our trading and portfolio rebalancing as well as make GOLD accessible to more investors.”

GOLD is backed by physically allocated gold bullions held by custodian JPMorgan Chase in London. Each physical bar is segregated, individually identified and allocated, which means there is no credit risk.

Over the past year the fund has had a return of 4.47%, which has outperformed the All Ordinaries, which is down 1.06% in the

12 months to June 2.