AZ Gold (AZG)
- What is AZ Gold?
- How is the fund sharia complaint?
- Am I buying physical gold?
- Subscription Period
- What Happens During Subscription?
- What Happens After Subscription Closes?
- How is the certificate price calculated?
- Buying and Selling
- How does this compare to the offline buying & selling of gold?
- Can I redeem physical gold?
- What are the risks?
- Who are the fund’s stakeholders?
What is AZ Gold?
AZ Gold is a sharia compliant mutual fund that invests in gold. The fund follows a passive investment strategy, whereby 100% of the money is invested in RJC “Responsible Jewellery Council” certified 24 karat gold, which is the official investment grade gold.
How is the fund sharia complaint?
The fund operates under the supervision of a Sharia committee to ensure the ongoing compliance of the fund’s investments with the principles of Islamic Sharia.
Am I buying physical gold?
Your investment is in certificates that are backed 100% by gold. However, you will not be getting the physical gold.
The mutual fund stores that gold at EGY Cash. EGY Cash shareholders are the Central Bank of Egypt, Ahly National Bank, Banque Misr and is responsible for cash transportation for Egypt’s biggest banks.
Subscription starts on Sunday 21st May. Azimut reserves the right to close the fund after the first 10 days with one day's notice, or after 5 days if funds collected exceed EGP 10m. At most, subscription could last until 25th July 2023.
What happens during subscription?
Funds are sent to Azimut, along with your subscription details, and during the subscription period are being invested in sharia compliant low-risk investment instruments.
What happens after subscription closes?
The collected amount from all investors is used to buy gold (24k gold) which is stored at a fully secured and insured storage facility. Your certificate price will fluctuate based on the price of gold. The fund is an open ended fund – this means that you can buy new certificates even after subscription closes.
How is the certificate price calculated?
At the end of each day, the value of the gold owned by the fund is calculated based on the current day’s price of gold. This is divided by the total number of certificates issued by the fund, which determines your certificate price. This exercise is done by an FRA licensed company that is independent of the asset manager.
Where can I see the prices of gold?
Prices are based on local prices of Egyptian certified gold refineries. The EGX are to make the gold prices available on their website on the homepage. The data is provided by Gold Net Trading, a subsidiary of Evolve Holding, a company specialized in precious metals trading.
How many grams of gold are my certificates worth?
As per the Asset Manager, you can divide the total value of your certificates by the current buy price of gold to get the number of grams of gold your investment is worth. Prices are currently viewed at the EGX website and will be visible in-app soon.
How to place an order?
- Open the Thndr app
- Search for AZ Gold or find it under the mutual funds theme through your Explore tab
- Tap on AZ Gold
- Tap on Buy
- Set the amount of certificates or the amount of money you would like to subscribe with
- The minimum subscription amount is 100 certificates (worth EGP 1,000)
- After the subscription period, there is no minimum & you can buy as little as 1 certificate
Buying and Selling
After the subscription period ends, you will be able to buy & sell certificates through the Thndr app.
Buy & sell orders can be submitted daily, and are executed on Mondays & Thursdays. Here’s what this means:
- You can place your order up until 11:30am on Monday & your order will be executed on Monday.
- If you place your order after 11:30am on Monday your order will be executed on Thursday
There are no fees incurred at buying certificates. Fees only apply at selling.
The fees are up to 4.9%, of which up to 1.5% (fund management, sponsorship, gold storage/custody, marketing and distribution) and up to 3.4% gold purchase cost (the premium of the gold bars – equivalent of masna3eya).
If the certificate is sold after 3 years, no fees apply.
This is because the total fees amortize daily, over a period of 3 years. Here's how it works:
- If you sell after 1 year of ownership, you will be charged up to a 3.3% fee.
- If you sell after 2 years of ownership, they will be charged up to a fee of 1.6%.
- If you sell after 3 years of ownership, fees are already paid.
How does this compare to the offline buying & selling of gold?
The gold market’s smallest denomination is 0.25 gram, with an implied premium of 2.5%-3.5%) Common market practice is to pay a commission (premiums/masna3eya) when buying gold and to pay another commission when selling your gold (the difference between the buy price and the sell price). The average commission in the market is 2.5-4% when buying and 1-2% when selling, on average (may increase or decrease). This is usually embedded in the communicated gold bar price.
The fund fees covers storing the gold and insuring it, and the ease of access digitally within a regulated framework.
Can I redeem physical gold?
If you would like to redeem the physical gold, here’s how:
- Your total investment value in the fund needs to be equivalent to 50 grams of gold.
- There will be up to 5.5% fee paid to redeem the physical gold.
What are the risks?
Price volatility: Gold prices can be highly volatile, experiencing significant fluctuations over short periods of time. While gold is often seen as a safe-haven asset during times of economic uncertainty or geopolitical instability, it is important to note that gold prices can also exhibit volatility even in stable market conditions. This means that even when things are relatively stable, gold prices can still experience sharp declines or sudden drops, potentially resulting in substantial gains or losses for investors.
Local versus international gold price: There are three factors that would result into a delta between international gold price and local price
- Currency exchange risk: Fluctuations in currency exchange rates can affect the local price of gold when converted from international prices. Variations between official and black market exchange rates can impact the final local price of gold.
- Supply and Demand: The local supply and demand dynamics for gold can affect its price. Local factors such as jewelry demand, investment demand, availability of gold supply, and local production can influence the local price of gold
- Relative local economic outlook: The economic conditions and outlook of a specific country can also impact the local price of gold. Factors such as inflation rates, interest rates, economic growth, political stability, and investor sentiment can influence the demand for gold within the country.
To learn more about other risks, here is a link to the prospectus, which includes detailed information on the fund.
Who are the fund’s stakeholders?
All of fund’s stakeholders are all regulated by the FRA
- Azimut Asset Management: Fully licensed asset manager by the FRA.
- Gold Net Trading “GNT”: FRA licensed gold trading provider
- EGY Cash: CBE owned storage facilitator and FRA licensed gold storage provider.
More About Azimut:
Azimut Egypt is one of the largest asset management companies in Egypt. With over 20 years of experience and whose Assets under Management exceed EGP 8.5 billion. They are the local investment arm of Azimut Group which operates in 18 countries around the Globe. Azimut Group manages around USD 70 billion in different asset classes.
More about Evolve:
Evolve Holding is an impact-driven investment company leading the development of a robust precious metals’ ecosystem in Egypt by providing alternative and innovative investment solutions that meet international standards and are delivered through compliant and secure channels.