Anyone who wants to buy a gold ETF in Germany faces a problem: such funds are not permitted in this country. However, gold ETCs offer an alternative.
• Gold ETFs are not permitted in Germany due to the UCITS directive
• Gold ETCs (Exchange Traded Commodities) offer an alternative to gold ETFs
• Both products are backed 100 percent with physical gold
Why there are no real gold ETFs in Germany
Many investors who want to participate in the performance of gold look for a gold ETF. But such products are not approved in Germany and the EU. The reason lies in the legal requirements of the UCITS directive (Undertakings for Collective Investments in Transferable Securities), which requires broad diversification within a fund. Since a gold ETF would invest exclusively in a single commodity, it does not meet this requirement.
According to the German Capital Investment Act, an ETF may not be invested exclusively in a single raw material. In other countries such as the USA or Switzerland, however, there are large gold ETFs – such as the SPDR Gold Shares or the iShares Gold Trust. However, it is also not possible for German investors to purchase such foreign products via foreign stock exchanges.
Gold ETCs as an alternative: This is how they work
As an alternative to non-approved gold ETFs, investors in Germany can use gold ETCs (Exchange Traded Commodities). These exchange-traded raw material certificates reflect the gold price almost one-to-one and can be traded like shares on the stock exchange. Most gold ETCs are backed by physical gold holdings and even allow delivery of the deposited gold.
A key difference to ETFs is the legal structure: While ETFs are considered special funds and are protected in the event of the provider’s insolvency, ETCs are Bonds. This means that investors could theoretically lose their investment if the issuer goes bankrupt. However, as Stiftung Warentest emphasizes in its test on gold ETCs, this risk can be classified as low for physically secured products with delivery rights.
Xetra-Gold and EUWAX Gold II: The most popular products
The best-known gold ETCs in Germany are Xetra-Gold and EUWAX Gold II. Both products are 100 percent backed by physical gold that is stored in German vaults. Each share corresponds to one gram of gold.
The two products differ primarily in terms of costs and delivery. With Xetra-Gold, storage costs of around 0.36 percent per year are incurred, but the spread when trading is very low. EUWAX Gold II, on the other hand, does not charge any ongoing fees, but has a higher spread. Physical delivery is possible free of charge for EUWAX Gold II starting from 100 grams, while fees apply for Xetra-Gold.
A special tax advantage: According to a ruling by the Federal Finance Court, gold ETCs with a physical deposit and a right to delivery are treated like physical gold for tax purposes. This means that profits are tax-free after a holding period of at least one year – regardless of whether the gold is actually delivered or sold on the stock exchange.
Anyone who wants to diversify their portfolio with gold without having to worry about storage and insurance will find gold ETCs a viable alternative to bars and coins. Stiftung Warentest recommends limiting the amount of gold in the portfolio to around ten percent, as gold can mitigate fluctuations but does not itself generate any ongoing income.
D. Maier / editorial team finanzen.net
