Japanese exchange to offer gold-based trading fund

Gold fund to trade on Osaka exchange
Osaka Securities Exchange, which operates the second-largest Japanese stock market, may list an exchange-traded gold fund as early as this month as it taps rising interest in commodities from investors looking to diversify their portfolios.
The fund, which is linked to gold prices, was being created by one of the largest investment trusts in Japan, and would have net assets under management of ¥3 billion to ¥5 billion, or $25 million to $42 million, said Kotaro Yamazawa, an executive at the exchange.
Rising commodity prices have stirred institutional and retail investor interest in the sector, and has led to an expansion in exchange-traded funds, known as ETFs. Gold prices reached a 26-year high of $730.40 an ounce in May 2006, while futures prices for the metal on the Tokyo Commodity Exchange reached a 21-year peak Feb. 26. The Osaka exchange would be the first in Japan to introduce an ETF for gold.
"Listing gold-linked ETFs in Japan will allow institutional investors more opportunities to meet their hedging needs, and may get more individuals interested in gold investments," said Masaaki Nangaku, the chairman of the Tokyo Commodity Exchange.
The Osaka Securities Exchange finished preparations last month to allow listing of ETFs based on "gold, crude, palm oil, non-ferrous metals, and whatever else," Yamazawa said.