First ESG Gold ETF (SESG) Hits the Market

Sprott Asset Management LP, a wholly-owned subsidiary of Sprott Inc. recently announced the launch of the Sprott ESG Gold ETF (SESG). This is the world’s first ETF that gives exposure to both gold and ESG. SESG is the first gold ETF that invests in gold bullion that meets the environmental, social, and governance (“ESG”) and provenance standards specially developed by Sprott.

Inside SESG

Sprott has partnered with the Royal Canadian Mint (“RCM”) to provide investors with an ETF that only sources gold from companies and mines that meet Sprott’s ESG screening criteria. Initially, Sprott ESG Approved Gold will be sourced from several Canadian mines operated by Agnico Eagle Mines Limited and Yamana Gold Inc.

How Does It Fit In a Portfolio?

Although the year 2022 has been extremely downbeat for stocks, gold has not posted a blockbuster performance either. The biggest gold bullion ETF SPDR Gold Shares GLD is off 2.2% this year compared with a 12.8% decline in the S&P 500 (at the time of writing). Still, the yellow metal has gone a long way in protecting investors’ assets (read: 5 Reasons Why Gold ETFs Could Shine Despite Fed Rate Hikes).

The Federal Reserve raised interest rates by 75 bps lately and hinted that it could slow the pace of its hiking campaign at some point, per a CNBC article. Slower clip of rate hikes is a plus for gold. The Russia-Ukraine war and occasional Covid lockdowns in China are causing severe supply-chain issues.

This along with global interest rate hikes may result in a severe growth slowdown globally. These slowdown worries might bolster gold’s safe-haven demand. Gold is often viewed as a hedge against inflation. We do not expect inflation to return to the Fed’s 2% inflation target in the medium to long term. In fact, inflation is sky-high globally and is expected to stay elevated in the coming days.

ESG is also a winning concept. Investors appear to be bothered about the future of the environment and the effect it might have on their investing portfolio. For example, since apprehension about the death of natural resources has urged global superpowers to boost clean energy and reduce carbon emissions, investors believe that stocks with higher ESG scores will eventually outperform.

Through partnership with the Royal Canadian Mint and relationships with leading Canadian gold producers, Sprott is well-positioned to offer a convenient way for investors to own physical gold that aligns with their ESG values,” said John Ciampaglia, CEO of Sprott Asset Management.

“At Agnico Eagle Mines Limited, we believe in operating responsibly and contributing positively to the communities in which we operate. We understand that ESG considerations are an opportunity to drive improved performance and deliver on our vision to build a high-value business……Agnico Eagle is proud to be a partner of choice as a trusted source of responsibly produced gold for this first ESG Gold Fund,” said Carol Plummer, Agnico Eagle’s Executive Vice President, Operational Excellence, per the press release.

Any Competition?

Though there are a lot of gold ETFs in the marketplace namely GLD, iShares Gold Trust IAU, SPDR Gold MiniShares Trust GLDM, Aberdeen Standard Physical Gold Shares ETF SGOL and gold mining ETFs like VanEck Gold Miners ETF GDX and VanEck Junior Gold Miners ETF GDXJ, none has the uniqueness like SESG as the newbie infuses the ESG criterion into the gold investing.

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SPDR Gold Shares (GLD): ETF Research Reports
iShares Gold Trust (IAU): ETF Research Reports
abrdn Physical Gold Shares ETF (SGOL): ETF Research Reports
VanEck Gold Miners ETF (GDX): ETF Research Reports
VanEck Junior Gold Miners ETF (GDXJ): ETF Research Reports
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
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