Merk Funds is the latest mutual fund provider to turn exchange traded fund sponsor, launching a new gold ETF that offers investors the opportunity to exchange shares for physical gold.
According to a NYSE release, the Merk Gold Trust (NYSEArca: OUNZ) will begin trading Friday, May 16. OUNZ has a 0.40% expense ratio.
The new gold ETF was created to provide investors with the opportunity to invest in gold through shares and be able to take delivery of the physical gold bullion in exchange for their shares, according to a SEC filing.
Many gold bugs have looked at physically backed gold ETFs with skepticism, speculating on the authenticity of the gold stored in vaults for the bullion-backed ETFs. Some investors have also raised concerns that these gold ETFs don’t have sufficient amount of gold stored to cover the shares traded.
The new Merk gold ETF could help alleviate concerns with greater transparency. A store of gold bars and coins, with a minimum fineness of 99.5% or for American Gold Eagle gold coins 91.67%, will be held in London vaults managed by J.P. Morgan Chase & Co.
The initial basket of ETF shares were created with a per share price equal to the value of 1/100th of a fine ounce of gold. The initial amount of gold required was 500 fine ounces of gold per basket, each equal to 50,000 shares.