Hang Seng Launches Physical Gold ETF With Tokenized Share Class

Hang Seng Investment Management is launching a physical gold ETF on the Hong Kong Stock Exchange on Thursday that will offer both traditional listed shares and tokenized fund units on blockchain, marking a rare dual-structure approach in the asset management industry.

The Hang Seng Gold ETF will trade under ticker 3170.HK with a board lot of 50 units and charges a 0.25% annual management fee, according to the fact sheet. The total recurring expenditure ratio is 0.4% with a tracking deviation of -0.5%.

The fund tracks the LBMA Morning Gold Price and holds physical gold bars stored in Hong Kong vaults, with HSBC serving as custodian through its wholly owned subsidiary. Hong Kong International Airport Precious Metals Storage Limited and Brink's Hong Kong Limited will safeguard the physical gold holdings, according to fund documents.

The tokenized share class represents a novel feature for Hong Kong ETFs. HSBC Bank will serve as tokenization agent, with Ethereum initially designated as the primary blockchain network. The fund may adopt other public blockchains with equivalent security and distributed ledger capabilities in the future.

Investors can subscribe to or redeem tokenized fund units only through eligible distributors, and no secondary market trading is available for the blockchain-based shares. The tokenized units exist separately from the exchange-listed shares, which will trade normally on the Hong Kong bourse.

Gold at All-Time Highs

The launch comes as gold continues its historic rally, surpassing $5,000 per ounce during Asian trading Monday for the first time. The precious metal surged 64% in 2025 and has gained over 16% year-to-date, driven by geopolitical uncertainty, central bank purchases and record ETF inflows globally.

Heraeus Metals Hong Kong Limited will serve alongside HSBC as gold dealer for the fund, which is domiciled in Hong Kong with a U.S. dollar base currency.

The dual-structure approach reflects Hong Kong's push to integrate traditional finance with blockchain technology as the city positions itself as a digital asset hub. Financial Secretary Paul Chan announced at Davos last week that Hong Kong has licensed 11 virtual asset trading platforms and expects to launch a stablecoin licensing regime later this year.

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Physical gold ETFs have proliferated globally as the metal's safe-haven appeal intensifies. The tokenized component could attract crypto-native investors seeking exposure to traditional assets through blockchain rails, though the lack of secondary market trading for tokenized units may limit liquidity compared to exchange-listed shares.