Credit Suisse, the Swiss private bank, has launched its first physically-backed gold exchange-traded fund as a part of plans to expand its global product range.

The Xmtch ETF on Gold in US dollars, which also can be hedged in Swiss franks and the euro, was listed yesterday on the SIX Swiss Exchange. The new fund, which is the bank’s first precious metals ETF, invests in physical gold without using derivative instruments, and its investment objective is to replicate the returns from gold on the spot market, Credit Suisse said in a statement.

"Gold ETFs are suitable for investors looking for a secure investment and a well-diversified portfolio. Investors can acquire a low-cost and flexible investment with a single transaction. Because the investment is fully backed by physical gold, there is no counterparty risk as regards index replication," said Thomas Merz, head of Xmtch marketing and distribution at Credit Suisse.

While the financial crisis may be over, uncertainty as to the "shape" of the global recovery prevails. Against this backdrop many investors are keen to hold gold as a safe, inflation-proof investment, and banks are rushing to meet demand by introducing new products such as ETFs. In October last year Julius Baer, the Swiss private bank, launched a physical gold fund which invests only in physical gold, primarily standard 400-ounce bars, which are stored in high-security Swiss vaults.  

According to some media reports, gold prices rose by 8.7 per cent in the three months to September 2009, marking its strongest performance since the first quarter of 2008.