FAQs

General

My broker indicated he/she cannot buy the product because it is in USD. What can I do?

Your broker should be able to buy or sell ETFs & ETPs as they are listed on regulated exchanges. Most brokers should be able to convert a USD amount to another currency. If not, please contact Issuer who will put you in touch with a broker that can execute your order.

Are there any other costs besides management fees?

No, although your broker or financial adviser may also charge you normal transactions costs (commissions) associated with the purchase or sale of ETCs.
 

How is liquidity provided?

ETCs are open-ended, therefore new ETCs can be created by Authorised Participants according to demand. Therefore, the liquidity of ETCs reflects the liquidity of the relevant underlying commodity market(s).
 

What would happen if ETF Securities were to go bankrupt?

If in the unlikely situation ETF Securities were to go bankrupt, this would not affect the value of the ETCs. Each ETC is issued by a Special Purpose Vehicle whose assets are ring-fenced for investor's safety and the activities for each Issuer is monitored by an independent Trustee. ETF Securities does not hold any investor money - all cash and commodities exposure is outsourced to credit worthy companies who are leaders in the respective field.

Can investors lose money?

The price of ETCs can go up or down, however investors cannot lose more than the amount of the initial investment.

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Exchange Traded Funds (ETFs)

What is an ETF?

An ETF is an 'exchange traded fund'. It is an index-tracking fund which is listed and traded on a stock exchange market. An ETF tracks whole indices such as the FTSE100.

Where and how do I buy ETFs?

You may buy ETFs as you would buy any other stock, at any brokerage firm.
 

How are ETFs priced?

As ETFs track the performance of a particular index, their base price is basically equivalent to the value of the index. 

What risks are involved in trading ETFs?

Given their nature as funds containing openly traded securities, investors should bear the following points in mind when trading ETFs:

  • Neither the capital nor the dividends are guaranteed
  • As the assets under management are stocks they are vulnerable to stock price fluctuations
  • Close tracking of the underlying indices can be difficult during periods of market volatility.
What benefits do ETFs offer investors?
  • Comprehensible and easy to use
  • As ETFs track indices which can readily be accessed in newspapers and on television, their prices are easy to understand.
  • As ETFs mirror the market as a whole there is no need to investigate individual companies' financial and business results, thus simplifying investment decisions.
  • Lower Risk
  • Unlike investing in individual stocks, ETFs offer the benefits of a diversified portfolio covering the underlying index's component stocks. In other words, the risks involved are reduced by spreading them across a wide portfolio.
  • Constant Trading during open market hours
  • Ordinary unit trusts can only be bought and redeemed at the daily base price.
  • In contrast, ETFs can be traded at any time during open hours. So investors can check prices and place orders as they do for stocks.
  • As ETF prices mirror the underlying index, they can move up and down. Investors can follow and exploit these movements allowing them to plan their transactions on a real-time basis.
  • Readily Available
  • Unlike, unit trusts/OEIC’s, ETFs are available through all UK brokers.
  • Low Costs
  • Investors can gain exposure to literally hundreds of securities through a single transaction.   As there is no need for fund administrators to produce prospectuses, nor any need to buy and sell assets at subscription and redemption, management costs are minimised.  
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Exchange Traded Products (ETPs)

What are Exchange Traded Commodities (ETC)?

ETCs are simple and transparent open-ended securities which trade on regulated exchanges. ETCs enable investors to gain exposure to commodities without trading futures or taking physical delivery.
 

Are ETCs similar to Exchange Traded Funds (ETFs)?

ETCs are very similar to ETFs because they are both open-ended, continuously traded and have multiple market makers. The main difference is that ETCs use a secured, undated, zero coupon note structure, whereas ETFs typically use a fund structure.
 

What are the benefits of ETCs?

Comprehensible and easy to use
As index ETCs mirror the market as a whole there is no need to investigate individual commodities thus simplifying investment decisions.

Low tracking error
The open-ended nature of these securities ensures tracking error is minimised and creates an arbitrage opportunity should the price drift away from the NAV.

Open-ended
Price not subject to supply and demand forces.

Liquid
ETCs are open-ended and can be created on-demand. Additionally, market makers provide guaranteed on-book liquidity all day.

Constant trading during open market hours
ETCs can be traded at any time during open hours. So investors can check prices and place orders just like for stocks. As ETC prices mirror the underlying index or commodity, they can move both up and down. Investors can follow and exploit these movements allowing them to plan their transactions on a real-time basis.

No management of physical or futures positions
Hassle free – reduces back-office costs.

Market access
All types of investors can gain exposure, and are charged the same fees.

Readily available
ETCs are available through all UK brokers.

Low costs
Investors can gain exposure to a vast array of index and single commodity securities through a single transaction.

Who should consider investing in ETCs?

The wide range of trading strategies available using ETCs mean that they can be suitable for the largest institutional investor through to the private investor. Although a passive tool, ETCs are commonly utilised as part of active strategies and can be useful in short term tactical plays as well as longer term investments. It really depends on the specific requirements of the individual investor and those unsure should seek professional advice.

How do I buy and sell ETCs?

Investors can buy and sell ETCs throughout the trading day on regulated stock exchanges through ordinary brokerage accounts.

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