HEAD-TO-HEAD: SSGA vs Value Partners

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Both funds purchase and store physical gold.

The SPDR fund holds 820.7 tonnes of gold. The manager has appointed HSBC as the custodian, which stores the gold in London.

Value Partners stores the bullion of 2.35 tonnes at HKIA Precious Metals Depository, a depot situated near the Hong Kong International Airport.

Ng said he does not have concern over the security of the storage as the custody locations – London and Hong Kong – are secure enough.

“They are both international cities with a sound common law structure. In addition to that, the high level of security is backed by a mature financial infrastructure,” he said.

In terms of their benchmark, both funds track the gold price movement provided by the London Bullion Market Association (LBMA).

The daily price of gold at the association is determined by auctions. Trading of gold and silver is done by the members of the association on the wholesale over-the-counter platform of the London bullion market.

The auction for gold runs twice every day – at 10:30 and at 15:00 London BST, according to the association’s website. They are represented in US dollar terms as the LBMA Gold Price AM and the LBMA Gold Price PM, respectively.

Value Partners takes the morning price as the fund’s benchmark while the SPDR fund tracks price announced in the afternoon.

However, the intra-day difference in price level tends to be minimal so it would make no big impact on investors’ decision when choosing between the two funds, Ng said.

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