iShares has branched out into exchange traded commodities (ETCs) after listing four physically backed products on the London Stock Exchange.

The iShares Physical Gold ETC, iShares Physical Silver ETC, iShares Physical Platinum ETC and iShares Physical Palladium ETC aim to track the spot prices of the underlying metals.

ETCs are debt securities, rather than funds or ETFs, backed by metals held in separate accounts in secure vaults. They give investors exposure to the prices of precious metals without them having to take physical ownership.

Unlike futures-based commodity ETFs where there can be big differences between the prices of the ETF and the commodity itself, the ETCs offer reruns based on the actual price, minus fees.  

Axel Lomholt, head of product development for iShares EMEA, comments: 'Precious metals can fulfil a number of functions in a portfolio, and are often considered a hedge against inflation as well as a diversification tool. iShares’ physically backed ETCs give investors precise exposure in a form that offers trading flexibility, cost
efficiency and is often more convenient for an investor than holding coins or bars themselves.'

The gold and silver ETCs will launch with $10 million worth of metal while the platinum and palladium products will initially be backed by $5 million worth of metal.

The new launches will add further fuel to what is an intensely competitive marketplace.

The gold ETC has a total expense ratio of 25 basis points, making it the cheapest of its kind in London. Meanwhile its silver, palladium and platinum counterparts slightly undercut rivals including ETF Securities and Deutsche Bank with TERs of 40 basis points.

Precious metal prices have soared in recent months amid volatility on the stock markets and currency markets. Gold hit record highs of more than $1,475 an ounce earlier this month and silver climbed above $40 an ounce for the first time since 1980.