Tabula Investment Management’s challenger ESG gold exchange-traded commodity (ETC) has enjoyed strong early traction with its pitch of mine to vault traceability resonating with investors.
Since listing on the London Stock Exchange at the end of April, the SMO Physical Gold ETC (BARS) has quickly scaled to $475m assets under management (AUM).
Tabula CEO Michael John Lytle (pictured) told ETF Stream initial inflows have been driven by investors with ESG constraints who have not been compelled by existing sustainable gold offerings.
“There has been a release of pent-up demand from investors who want a gold product that actually complies with their internal ESG restrictions and guidelines and nobody had really done that before,” Lytle said.
“You just have to find latent demand from investors who are already buying gold in some form but have had pressure from clients to have more compliant solutions.”
BARS marks Tabula’s first venture outside of fixed income ETFs and sees the firm partner with Single Mine Origin (SMO), a company dedicated to conducting ‘mine to vault’ due diligence on mining companies, mining sites and refiners to ensure gold is sourced from a select list of mines adhering to ESG criteria.
This includes every mine being audited to verify they provide social, environmental and cultural support to communities, with underlying gold not being of Russian origin, not being recycled gold of unknown provenance and mercury not being used in the extraction process.
Gold can also only be sourced from mining companies aligned with SMO’s internal governance framework and international standards such as World Gold Council Responsible Gold Mining Principles.
“Unless you control the sourcing of the gold, you cannot say where it comes from and then if you can say where it comes from, you have to do mine by mine due diligence and that is time consuming, difficult and does not comply with the way the gold market actually works. You actually have to change how the market works.” Lytle added.
“If you tell a refiner you only want gold from one mine, they will tell you it does not work like that and they only work with the mining corporate entity rather than the individual mines. There is quite a lot of resistance to this process.”
Where new securities are issued, Tabula notes its ETC may temporarily be backed by non-SMO gold, however, the underlying will still meet LBMA delivery and responsible gold standards, meaning sustainable provenance will always remain at least on par with RMAU.
Following Tabula’s recent acquisition by Janus Henderson, it appears BARS may only be the start of the firm’s expansion out of its previous fixed income focus.
“There have been opportunities in new exposures we had not looked at before,” Lytle continued. “We had developed a specialty in fixed income, but the opportunity is across asset classes, in the systematic and active space.
“We have our own salespeople who are ETF-specific. The Janus Henderson salesforce is massive and will be very relevant when we roll out the firm's active product.”
