March 19, 2014 / 5:57 PM / in 3 years

Standard Bank set to list first South African palladium ETF

2 Min Read

* Palladium-backed fund to be listed on JSE on Monday

* Spot palladium prices up 7 pct this year

By Jan Harvey

LONDON, March 19 (Reuters) - Standard Bank is set to list South Africa's first palladium-backed exchange-traded fund on the Johannesburg Stock Exchange on Monday, the bank said on Wednesday.

Each security in the new fund will be backed by 1/100 of an ounce of physical palladium, the bank said. The metal will be held with custodian JPMorgan in London.

Precious metals ETFs, which issue securities backed by physical metal, have proved a popular way to invest in the sector, giving holders exposure to the underlying asset price without having to store or insure the metal.

The new fund's securities will be classified as a domestic investment, Standard Bank said. That may add to its appeal for South African funds, which can only invest a maximum of 35 percent of the their total assets abroad.

Palladium prices have risen 7 percent this year in dollar terms, taking support from concerns that the standoff over Ukraine could affect supply from number one producer Russia, and from a strike among mineworkers in South Africa.

South Africa is the second largest miner of palladium, a white precious metal primarily used in autocatalysts.

"Palladium is one of the metals which is known to be produced here, and which is known to investors," Johann Erasmus, head of the executive global structuring group at Standard Bank, said. "We believe there's a lot of excitement that investors can now access the metal directly."

Standard Bank is expecting to see interest from both institutional investors and the retail market, he said.

South Africa's Absa Capital is also in the process of launching a palladium-backed ETF. Its platinum-backed fund, NewPlat ETF, grew within four months of its launch in April last year into the world's biggest. (Reporting by Jan Harvey. Editing by Jane Merriman)

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