Korea Investment Management announced on the 25th that the net asset value of the ACE KRX Gold Spot ETF has surpassed 500 billion won.
According to the Korea Exchange, the ACE KRX Gold Spot ETF was valued at 501.3 billion won as of the closing price on the 21st, crossing the 500 billion won mark for the first time. At the end of last year, the ETF had a net asset value of 109.5 billion won but grew nearly fivefold this year.
The rapid increase in the net assets of the ACE KRX Gold Spot ETF is attributed to the buying trend of individual investors and its excellent returns. It is reported that the ongoing Middle East conflicts and the worsening Russia-Ukraine war have heightened individual investors’ interest in gold, a safe asset. Individual investors have net purchased about 176 billion won worth of the ACE KRX Gold Spot ETF since the beginning of the year, a figure significantly higher than the average net purchase of 7.3 billion won for 24 domestic commodity ETFs during the same period.
There was also substantial inflow from personal pensions and retirement pensions. According to Koscom ETF Check, 324.7 billion won worth of funds flowed into the ACE KRX Gold Spot ETF within pension accounts. It is analyzed that more investors are looking to invest long-term in real gold to receive tax credit benefits. Excluding this ETF, other commodity ETFs saw an average net outflow of 2.6 billion won, indicating a significant interest in gold spot investments.
Excellent returns also contributed to the increase in net assets. The ACE KRX Gold Spot ETF recorded a three-month return of 12.30%, ranking first among domestic commodity ETFs. Its six-month and year-to-date returns were 17.83% and 40.71% respectively, greatly surpassing the average returns of -3.42% and 2.08% for other commodity ETFs during the same periods.
The ACE KRX Gold Spot ETF was listed in December 2021 as the first and only domestic ETF focusing on gold spot investments. It tracks the KRX Gold Spot Index, calculated and announced by the Korea Exchange. This index reflects the net return after deducting storage costs from the price return of gold spot (1 kg) traded on the KRX Gold Market. A major advantage is that, unlike gold futures ETFs, it does not incur rollover costs associated with the monthly replacement process of future contracts.
Kim Seung-hyun, in charge of ETF Consulting at Korea Investment Management, stated, “On the 18th, investment bank Goldman Sachs mentioned that central banks worldwide might start holding gold to hedge against the dollar due to concerns over the increasing U.S. fiscal deficit,” and added, “Global demand for gold will continue amidst sustained geopolitical risks and growing global volatility.”
He further mentioned, “As the only domestic gold ETF that can be invested in retirement pension accounts, the ACE KRX Gold Spot ETF can help balance investment portfolios for long-term investments.”