Stoking hopes of a potential diamond exchange traded fund, GemShares has filed with the Securities and Exchange Commission to bring to market a physically backed diamond fund.
According to an SEC filing, the GemShares Physical Diamond Trust will try to reflect the performance of the wholesale price of GemShares GIGS Diamond Baskets. The Trust would hold physical diamonds and issue Share Baskets in exchange for deposits of diamonds.
Each basket will be comprised of diamonds divided into three separate weight classes.
“The Sponsor believes that, for many investors, the Shares will represent a cost-effective investment similar to an outright investment in commonly produced, inventoried, consumed and readily available physical diamonds,” the filing stated.
The filing also said that Authorized Participants will be able to redeem shares for diamonds – each share of the ETF would represent a fractional ownership of physical diamonds, similar to how physically backed precious metals ETFs are structured.
The ETF vehicle would allow investors to easily price and gain exposure to diamond assets.
“The Sponsor believes that investors will be able to more effectively implement strategic and tactical asset allocation strategies that use diamonds by using the Shares instead of using the traditional means of purchasing, trading, holding and storing diamonds and, for many investors, transaction costs related to the Shares will be lower than those associated with the purchase, storage and insurance of physical diamonds,” according to the filing.