Hang Seng Investment Management has introduced an innovative new offering to the Hong Kong market: a physically-backed gold Exchange Traded Fund (ETF) that also paves the way for future tokenized access to the precious metal. This strategic move aims to provide investors with a robust, transparent vehicle for gold exposure while exploring the cutting-edge possibilities of blockchain technology in asset management.
A New Physically-Backed Gold ETF
Launched on the Hong Kong Stock Exchange under ticker 3170, the Hang Seng Gold ETF is meticulously designed to track the widely recognized LBMA Gold Price AM benchmark. This passive fund directly holds physical gold bars adhering to London Bullion Market Association (LBMA) good delivery standards, ensuring genuine asset backing. The gold is securely stored in Hong Kong vaults, with HSBC serving as the appointed custodian. While retail investors trade units like ordinary shares on the secondary market, authorized distributors have the flexibility to create and redeem units in cash or, in specific cases, in physical gold. The ETF, traded in Hong Kong Dollars with a lot size of 50 units, operates with an estimated annual expense of 0.40% and will not distribute dividends, meaning returns are solely tied to gold price movements.
Pioneering Tokenized Gold Ownership
Beyond the traditional listed ETF, Hang Seng has unveiled ambitious plans for non-listed tokenized units of this very same gold fund. These pioneering units, which will represent registered stakes on a blockchain infrastructure, are currently awaiting regulatory approvals. HSBC is again at the forefront, designated as the tokenization agent responsible for issuing digital tokens that signify ownership of fund units. Each token will correspond to a unit or a fraction thereof, with all subscription and redemption transactions immutably recorded on a public blockchain, initially intended to be Ethereum. While offering a forward-looking method of ownership, these tokenized units will only be accessible via authorized distributors, and notably, will not be traded on any secondary market. This dual approach from Hang Seng highlights a clear vision for integrating traditional asset management with the future of digital finance.
