TORONTO (miningweekly.com) – Investment management firm Purpose Investments has completed the conversion of the Silver Bullion Trust (SBT) into an open-ended exchange traded fund (ETF) and both US and Canadian dollar-denominated non-currency hedged units of the fund started trading on the TSX on Thursday.

The fund had also qualified to issue a new class of ETF currency-hedged units of the fund, which also started trading Thursday.

"Precious metals, and silver specifically, play an integral part of an investor’s portfolio. Silver has a negative or low correlation to traditional asset classes, making it an effective portfolio diversifier,” stated Purpose president and CEO Som Seif.

“Inclusion of the SBT in a portfolio can increase overall risk-adjusted returns and offer downside protection from inflation. Purpose is proud to be able to offer a secure, low-cost and liquid solution for investors looking to add silver to their portfolios,” he noted.

Purpose advised in a news release to Mining Weekly Online that, by converting to an ETF, the fund was expected to provide unit holders with several benefits.

ETFs were regarded as being among the most efficient investment vehicles, as market price and net asset values were aligned with each other, eliminating discounts or premiums, while demanding lower management fees. It provided more efficient trading, as the market price of the fund units were generally closer to its intrinsic net asset value, as well as greater market liquidity.

The conversion to an ETF would not change the investment objective or investment restrictions of the fund.

Purpose, which became the manager and trustee of the SBT early in February, had accumulated about $1.9-billion in assets under its management since its creation about three years ago. It was formed by Seif, the mastermind behind Claymore Investments, which had about $8-billion in assets when it was sold to investment giant Blackrock in 2012.

SBT invested in and held substantially all of its assets in long-term holdings of physical silver bullion to provide a secure, convenient, low-cost alternative for investors interested in holding an investment in silver bullion. The fund held unencumbered silver bullion on a long-term basis in 1 000 oz international bar sizes, held on a fully allocated and segregated basis, in treasury vault facilities of a Canadian chartered bank.