To understand why IAU has suspended share creations, investors should know how the gold ETF works. Since IAU tracks a basket of physical gold assets stored in a vault, the ETF is not registered like other investment companies under the ’40 Act – ’40 Act funds, like stock and bond ETFs, provide continues offering of shares and does not require registration of additional shares to grow. Instead, IAU is registered as a grantor trust under the ’33 Act. Consequently, under the ’33 Act, subscriptions for new shares in excess of shares already registered require additional SEC filings.
Due to the sudden spike in demand for gold assets, IAU has met its share creation quota.
“We are registering new shares to accommodate future creations in the primary market by filing a Form 8-K to announce the resumption of the offering of new shares,” according to iShares.
IAU should resume normal creations in six business days.
“We expect that the filing of the 8-K will occur before the close of normal settlement cycles,” according to iShares.
Max Chen contributed to this article.