Fund manager Liontamer is looking to raise up to $10 million with the launch of the country's first capital-protected gold fund.The fund's investment director Sean Butler said investors often turned to gold in times of economic uncertainty and he expected
Fund manager Liontamer is looking to raise up to $10 million with the launch of the country’s first capital-protected gold fund.
The fund’s investment director Sean Butler said investors often turned to gold in times of economic uncertainty and he expected the new index, Gold Series 1, to attract those wanting a safe-haven against global market shocks.
“People like gold when it’s all a bit chaotic out there,” he said.
To invest in gold, most New Zealanders buy shares in a mining company, invest in exchange-traded funds or buy physical gold – at a premium.
Mr Butler said Gold Series 1 was the first local index offering exposure to international price movements in gold.
Like all Liontamer’s funds, the index is capital protected, which helps lock-in gains if the price of gold falls.
Although strong demand for gold from investors and the jewellery industry, coupled with supply constraints, boded well for future gains, it was difficult to predict how long this would continue, he said.
“Investors may want to hedge their allocation to gold and take out some capital protection in the event that the gold price starts to weaken,” he said.
Recent gains in the gold price reflected uncertainty over European sovereign debt and a potential break-up in the Euro zone, he said.
“There is no quick-fix to European sovereign debt, so investors are seeking protection in their portfolios against the possible future effects of monetary stabilisation.
“Gold is widely used as a safe haven for investors, especially during volatile economic conditions and times where there is uncertainty about major currencies like we are currently experiencing with the Euro.
The Gold Series 1 has a six-year investment term and provides 120% exposure to the price of gold with a maximum return of 100%, -- meaning that any gains are boosted by 1.2 times and investors can, at most, double their money.
Liontamer’s Precious Metals Fund, which invested in gold, matured early last year returning 48% to investors over three years.
