Hantoo Asset Management, ACE KRX Gold Spot ETF Net Asset Value Reaches 500 Billion KRW

Korea Investment Trust Management announced on the 25th that the net asset value of the ACE KRX Gold Spot Exchange-Traded Fund (ETF) has surpassed 500 billion KRW.

According to the Korea Exchange, the ACE KRX Gold Spot ETF reached 501.3 billion KRW as of the closing price on the 21st, marking the first time it exceeded 500 billion KRW. At the end of last year, the net asset value of the ACE KRX Gold Spot ETF was 109.5 billion KRW, but it rapidly expanded nearly fivefold this year.

The rapid increase in the net assets of the ACE KRX Gold Spot ETF is attributed to strong buying by individual investors and excellent returns. It is reported that individual investors’ interest in gold, a safe-haven asset, has increased due to the ongoing Middle East war and the worsening Russia-Ukraine conflict. Individual investors have net purchased approximately 176 billion KRW of the ACE KRX Gold Spot ETF since the beginning of the year. This figure overwhelmingly surpasses the average net purchase amount of 7.3 billion KRW by individual investors across 24 domestic commodity ETFs during the same period.

There was also significant inflow of funds from personal pension and retirement pension accounts. According to Koscom ETF Check, 324.7 billion KRW flowed into the ACE KRX Gold Spot ETF within pension accounts. This suggests an increasing number of investors seeking long-term investment in gold spot, a safe asset, while benefiting from tax deduction incentives. Considering that other commodity ETFs, excluding this ETF, experienced an average net outflow of 2.6 billion KRW, interest in gold spot investment was overwhelmingly high.

Excellent returns also contributed to the increase in net assets. The ACE KRX Gold Spot ETF posted a 3-month return of 12.30%, ranking first among domestic commodity ETFs. Its 6-month and year-to-date returns were 17.83% and 40.71%, respectively, significantly outperforming the average commodity ETF returns of -3.42% and 2.08% during the same periods.

The ACE KRX Gold Spot ETF, listed in December 2021, is the first and only domestic gold spot investment ETF. It tracks the ‘KRX Gold Spot Index’ calculated and published by the Korea Exchange. This index reflects the net return after deducting storage costs from the price return of 1kg gold spot traded on the KRX Gold Market. Compared to gold futures ETFs, it has the advantage of no rollover costs (costs incurred during the monthly contract rollover process of futures products).

Seunghyun Kim, ETF Consulting Manager at Korea Investment Trust Management, stated, “On the 18th, investment bank Goldman Sachs mentioned concerns about a growing U.S. fiscal deficit, suggesting that central banks worldwide may increase gold holdings to hedge against the dollar.” He added, “Global demand for gold will continue amid ongoing geopolitical risks and increased global volatility.”

He continued, “The ACE KRX Gold Spot ETF is the only domestic gold ETF available for investment through retirement pension accounts, which can help balance investment portfolios for long-term investors.”