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New Gold ETF records -4.58% YTD, has room to turn green

Category: ETFs

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New Gold ETF records -4.58% YTD, has room to turn green


Friday, March 22, 2013/ The Analyst

Exchange traded funds (ETFs) are securities that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. The Gold ETF is a simple way for investors to purchase gold. Rather than physically buying the precious metal you can invest in the fund which exactly mirrors the price movement of gold; a relatively low cost and easily tradable way to invest in the metal.

As ETFs are tagged by the assets they hold, the management of the Nigerian Stock Exchange (NSE) intends to list five exchange-traded funds (ETFs) this year to increase the product(s) range available to investors. This listing should help investors diversify their investments in the bourse.

In the year 2011, NSE introduced the New Gold Exchange Traded Funds - 400,000 units of New Gold Exchange Traded Funds were listed by the NSE on 19th December 2011 at a Net Asset Value of N2, 526 per unit.

So far in 2013, Gold has fallen by -4.1% at the international market. Likewise, New Gold ETF has also fallen by -4.28% on the Nigerian bourse between now and when it was listed.


Currently, Gold rose to a near one-month high on Thursday, as safe-haven buying emerged after the European Union gave Cyprus an ultimatum to raise billions of euros it needs to clinch a bailout deal or face a likely exit from the currency zone.

A quick look at the performance of Gold at the international market in the past ten (10) years blurt out that Gold has closed in the green zone between 2004 and 2012 while the performance so far in 2013 has been negative – it averages out at the +14.8% return witnessed. Based on the past development, the expectation is that Gold can still turn green before the year runs out.

The performance of New Gold ETF would appear on a slow pick up relative to the market in the last three (3) years as it recorded a -2.22% loss in 2011 and is currently at -4.58% YTD loss in 2013; off the back of the +2.93% gain 2012.


As investors become more confident in the global economy and are putting more money in riskier assets, Gold still remains an attractive option for portfolio diversification.

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