The price of New gold ETF jumped 35% on Tuesday, its biggest one-day gain since February 11 2016. Trading at a price of N3,392 from its previous close of N2,500, the ETF generated a 35% return. That brings the MTD and YTD performance to 42.82% and 66.19% respectively.
It is quite a remarkable performance when weighed against other exchange traded funds, although the Vetiva Banking Etf has returned 28.94% YTD. Gold has been known to preserve wealth through economic depressions and stock market crashes, acting as a form of wealth insurance. That makes it a desirable asset class to hold in a portfolio. While Gold is an asset of great value, it is not readily accessible to Nigerian investors as an investment class. Gold ETF therefore offers investors an opportunity to benefit from the upticks in gold price.
In an era where the rate of inflation is over 15%, New Gold ETF may be a good hedge against the ugly effects of inflation.
An ETF is an acronym for Exchange Traded Fund. They are investment fund traded on stock exchanges (like the NSE), much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. An ETF can for example, consist of all the banks on the Nigerian stock exchange. The ETF “for example we name it ETF Bank” can then be traded on the stock exchange as if it were a stock itself.