* Absa plans to launch palladium ETF before end 2013
* Absa platinum fund became world's biggest in 4 months
* Palladium will be exclusively sourced in South Africa
By Jan Harvey
ROME, Sept 29 (Reuters) - South Africa's Absa Capital has
received regulatory approval for its planned Johannesburg-listed
palladium exchange-traded fund and hopes to launch the product
by the end of the year, a spokesman for Absa said on Sunday.
The fund will be backed exclusively by palladium sourced in
South Africa, Absa's head of investments Vladimir Nedeljkovic
said on Sunday on the sidelines of the London Bullion Market
Association's annual conference.
"We have regulatory approval, and we're now basically just
finalising a couple of small things," Nedeljkovic said. "We
definitely want to list before the end of the year."
A similar fund backed by platinum that Absa
launched in April saw huge inflows from investors, growing in
just four months into the world's biggest platinum-backed ETF by
metal under management.
Palladium has been the best performer of the main
precious metals this year, with prices up 3.5 percent since the
end of 2012, compared with an 8 percent drop in platinum prices
and a 20 percent fall in gold.
The metal, which is chiefly used in autocatalysts, has
benefited from growth in car sales in its core markets, the
United States and China, as well as speculation that supply from
main producer Russia and South Africa could fall.
Nedeljkovic said he expected most interest in the fund to
come from institutional investors. "It's primarily going to be
an institutional product," he said. "There are several asset
managers, large institutional investors in South Africa that are
He said he did not expect the fund to struggle to find metal
within South Africa to back the new ETF, saying South African
investors' particular affinity with platinum meant the new fund
would probably grow more slowly than NewPlat.
"In principle it's more complicated, just because of the
fact that only 30 percent of global palladium supply is South
African, rather than 80 percent," as it is for platinum, he
said. "But we've worked on this for a while, so it's not likely
to be a problem."
South Africa is the world's second largest producer of
palladium after Russia, with output of 2.33 million ounces last
year, or about a third of global supply.
Precious metals ETFs, which issue securities backed by
physical stocks of a given commodity, have proved a popular way
to invest in the sector since they were launched a decade ago.
There are currently around 1.8 million ounces of palladium
held in ETFs, and nearly 2 million ounces of platinum. Nearly a
third of that platinum, just under 659,000 ounces, is held by
the NewPlat ETF operated by Absa.