BMG Gold BullionFund has raised $8,550,880 in an initial public offering of Class S1 and S2 units, Bullion Management Services Inc. (BMS) said Monday.

Each unit was sold for $10 per unit.

The fund is an open-end mutual fund trust which invests directly in unencumbered, physical gold bullion with no financial intermediaries or any counterparty risk. Units can be redeemed on a daily basis based on the fund’s net asset value per unit.

The fund invests almost all of its net assets in unencumbered, physical gold bullion regardless of market conditions. A small portion of the fund’s assets, generally less than 5%, is held in cash to allow the fund to pay its expenses and to facilitate any redemption requests. The fund does not use derivatives or invest in companies that produce gold bullion.

BMS, the manager and trustee of the fund, says that the fund has the same liquidity as gold bullion, unlike other gold-related funds whose liquidity is limited by market capitalization and trading volume.

It adds that the fund’s gold bullion is stored on an allocated, segregated and insured basis with a major Canadian bank and never loaned out.

Because the fund does not hedge, market time, leverage or rebalance its gold bullion, its performance tracks the price of bullion not the skills of an advisor, BMS explains.

“With investor concern being expressed about the underlying assets and liquidity of gold bullion investments, BMS is pleased to provide a unique product offering in Canada, a country renowned for its financial stability and rule of law, that maintains the attributes of gold itself: liquidity, no counterparty risk and independent of management skills,” Nick Barisheff, president and CEO of BMS, says.

The syndicate of underwriters was led by BMO Capital Markets. The syndicate included HSBC Securities (Canada) Inc., Canaccord Genuity Corp., Dundee Securities Corporation, GMP Securities L.P., Macquarie Capital Markets Canada Ltd., Desjardins Securities Inc., Mackie Research Capital Corporation, Raymond James Ltd., Wellington West Capital Markets Inc. and MGI Securities Inc.

Based in Markham, Ont., BMS has approximately $430 million in assets under management that is almost entirely invested in bullion.

IE