ETF Securities Plans Physical Metal-Backed ETFs


"Funds would offer exposure through use of warrants evidencing physical ownership."

ETF Securities, the Europe-based ETF issuer responsible for a series of ultra-popular physically backed precious metal ETFs, recently made an SEC filing detailing plans for a series of physically backed exchange traded products targeting the industrial metal space.

In total, the filing calls for seven funds with one targeting each of aluminum, copper, lead, nickel, tin and zinc, as well as a basket fund which will invest in all of the six aforementioned commodities.

No expense ratios or ticker symbols were included, but the filing did include a significant amount of information on how the proposed funds would work.

The proposed funds would offer exposure to these industrial metals through the use of warrants evidencing ownership of physical aluminum, copper, lead, nickel, tin and zinc. That would be different from the strategies used by existing physically backed precious metals ETFs, which store the underlying assets in secure vaults. Such a strategy works for funds offering exposure to metals with high value-to-weight ratios such as gold, but the lower relative value of industrial metals necessitates an alternative approach to offering physical exposure.

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