SSGA Launches Gold Fund

With gold trading at historically high levels, State Street Global Advisors (SSGA), the asset management business of State Street Corporation has launched the State Street Gold Fund, a new unlisted managed fund in Australia.

The new fund seeks to track the performance of the spot gold price (LBMA Gold Price PM in Australian dollars) by investing in securities that are backed by physical gold bullion held in vaults in London, New York and Zurich. SSGA says the launch has been in response to investor demand. ANZ Private Bank will be seeding the State Street Gold Fund, as part of a broader change to its strategic asset allocation that includes a debut allocation to gold.

State Street Global Advisors’ Head of Investments in Australia, Jonathan Shead, said the fund is a significant new offering for the Australian market. “Gold has never gone away as a diversifying allocation of an investment portfolio, but today’s heightened climate of economic and geopolitical uncertainty has brought its role to the fore,” Jonathan Shead, head of investments, Australia at SSGA says. “Investors tend to use gold as a potential hedge against market volatility and for its potential diversification benefits when included in a traditional portfolio of equity and fixed income assets/”

Robin Tsui, State Street Global Advisors’ Asia Pacific gold strategist, adds that a key attribute of the fund is its provision of a cost-efficient and secure way to gain access to the gold market without having to pay the transportation, storage and insurance costs of holding physical gold.

ANZ Private Bank’s chief investment officer, Lakshman Anantakrishnan, says the decision to make an allocation to gold is focused on improving the risk characteristics of its multi-asset portfolios. “Typically, rising real yields and a strong dollar spell trouble for the precious metal, but safe haven demand is rising, and some governments and central banks are looking to diversify their reserve assets away from the dollar,” he says. “For investors, the asset class can play a similar role during periods of uncertainty, helping add diversification to portfolios given its historically low or negative correlation to most other asset classes.”

The new fund also leverages State Street Global Advisors’ strategic partnership with the World Gold Council. “We are excited to continue working with the World Gold Council to help investors understand the benefits of investing in gold,” Shead says.