• For the financial period ended 31 December 2019, the TradePlus Shariah Gold Tracker registered a positive return of 17.4%, compared to the LBMA Gold Price AM, which recorded a positive return of 18.8%. The Fund had only underperformed the Benchmark by 1.4%.
• There are still some upside to gold prices from uncertainties surrounding progression of trade tension talks, slower global growth, accommodative monetary policies in major economies, and concerns amid Covid-19 outbreak.
• We introduce our fair value of RM2.30 for TradePlus Shariah. We maintain BUY on the ETF.

The Fund and Its Objective

The TradePlus Shariah Gold Tracker, which is managed by Affin Hwang Asset Management, aims to provide investors with investment results which closely track the performance of Gold price where its benchmark is the LBMA Gold Price AM. The Fund will invest a minimum of 95% of its NAV in physical gold bars, while the balance is to be invested in Islamic money market instruments and/or Islamic deposits. The minimum creation/redemption basket is 500,000 units.

Performance of the Fund

In the TradePlus Shariah Gold Tracker’s annual report for the financial period ended 31 December 2019, the TradePlus Shariah Gold Tracker (the Fund) registered a positive return of 17.4%, compared to the LBMA Gold Price AM (the Benchmark), which recorded a return of 18.8%. The Fund had only underperformed the Benchmark by 1.4%. Since the commencement of the Fund, it has registered a positive return of 14.6% compared to the Benchmark of 17.7%. With a tracking error of 0.11%, the Fund has met its objective of providing investors with investment results which closely track the performance of Gold price. As at 31 December 2019, the Fund’s Net Asset Value (NAV) per unit was US$0.4942 compared to US$0.4208 as at 31 December 2018. There was no income distribution or unit split declared for the financial year ended 31 December 2019. The Manager invested 99.91% of the fund’s NAV in physical gold bars, while the balance of 0.09% was kept in cash. The Fund’s AUM was US$11.223mn while the number of units in circulation was 22,710,000. The management expense ratio was at 1%.

Strong Performance of Gold in 2019

In 2019, gold has surged by 18.9% yoy to US$1,523.1/oz compared to a decline of 2.1% in 2018 to US$1,309.3/oz. This was the fastest rise in gold prices since 2016, when uncertainties stemming from US elections as well as a vote for Brexit supported inflows for safe haven demand then. In 2019, uncertainties surrounding US-China trade war talks, Hong Kong protests, Brexit developments and tensions in the Middle East throughout most of 2019 and recent Covid-19 outbreak and global policy rate cuts (especially by the US Fed) have continued to support gold prices during the year. Due to geopolitical concerns and low interest rates, the World Gold Council noted that holdings in gold-backed ETFs hit an all-time high of 2,885.5 tonnes in 4Q19 compared to 2,858.8 tonnes in 3Q19 mainly from North American and European-listed funds.

Source: Affin Hwang Research - 6 Mar 2020