18 March 2021
by Andrea Gaini

Allocation to metals to increase over next two years, research finds

A study by the Global Palladium Fund (GPF) reveals that institutional investors and wealth managers expect an increase in allocation to metals, either directly or indirectly, over the next 24 months.

money in a jar
© Josh Appel/Unsplash

The research, which has recently listed four physically-backed gold, silver, platinum and palladium metal Exchange Traded Commodities (ETCs), shows that over the next two years, the majority (79%) expect increased allocation to metal ETCs, 69% increase use of actively managed, metal-focused commodity funds, and 66% will increase exposure to mining stocks.

When asked the main reason for their expected increased use of metal ETCs, 20% highlighted both ease of exposure and liquidity, both on exchange and through primary market creations and redemption orders directly through the issuer. This was followed by 16% who indicated growing competition in the metal ETC market resulting in more choice and lower charges, and 13% who cited the relatively low cost of ETC transactions (low bid-ask spreads on exchange and zero bid-ask spreads in the primary market). Similarly, 13% said improving ESG and ethical sourcing.

Alexander Stoyanov, Chief Executive Officer of GPF says, ‘Our research shows that the current interest in investing in metals by institutional investors looks set to continue as they seek to benefit from the advantages of the asset class.  Investment vehicles such as ETCs provide liquid, cost effective exposure to a range of metals.’

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Andrea Gaini