Chance to invest in fine metals

THE etfSA website and investment platform, now enables investors to transact in the commodity-linker exchange trader notes, offered by Standard Bank.

These securities provide direct exposure to precious metal prices in international markets and trade in rands on the JSE as listed securities.

Through the exchange traded notes (ETNs), investors gain access to investment to precious metals such as gold, silver, platinum and palladium without physically owning them.

The minimum investment starts from a lump sum of R1000 and, or R300 a month debit orders. There is no limit on maximum investments.

When the commodity price goes up, you can then sell your investment and make your profit. You can do this through the help of a financial advisor or can do it yourself by observing the performance of the commodities.

Managing director of etfSA Mike Brown said "commodities offer a prime means of diversification and limit the risk in investor portfolios".

"The history of commodity prices providing a hedge against adverse conditions in other investment assets, is well documented and investors should consider an exposure directly to commodities, as part of their hedge strategy in balanced portfolios," he said.

The Standard Bank Commodity-Linkers invest directly in precious metals through international future markets, but the investor is issued a spot instrument, traded on the JSE, without the necessity of trading themselves in the underlying commodity future. The investors earn their total returns in commodity-linker ETNs from four sources:

• The returns from the price changes in the near date futures contract in the commodity;
• The interest rates (US dollars) earned from margin posted for the commodity futures contracts;
• The returns earned from changes in the US dollar against the rand exchange;
• The yield from the roll-out-re-balancing earned from the current futures contract to a more distant future contract.

Brown said ETNs differ from exchange traded funds (ETFs) in that they do not cover portfolios of securities or assets and therefore, do not qualify as a collective investment scheme.

But Brown said they were listed on the JSE and had the same regulations, rules and benefits as any other JSE listed securities.

An investor is exposed to the credit risk of the issuer of the ETN, in this case Standard Bank.

"For the first time, South African investors can invest through convenience of listed securities, directly in silver, platinum and palladium."