IndexIQ, exchange traded fund provider of alternative investment strategies, has filed with the Securities and Exchange Commission to launch a physically backed diamond fund.
The ETF will operate much like most physically backed precious metals ETFs on the market today. According to the filing, the IQ Physical Diamond Trust will hold physical diamonds, dividing diamonds into subcategories with characteristic variations. The diamonds used will be certified by the Gemological Institute of America. [Why Isn’t There an ETF for Diamonds?]
Additionally, the Trust will deal in “Diamond Parcels,” baskets of diamonds that meet required delivery standards. Consequently, the ETF shares will try to reflect the price of an outright investment in a Diamond Parcel.
The Trust will not hold derivative instruments, such as futures or over-the-counter swaps, to track the price of diamonds. The diamonds will be stored in vaults in Antwerp. No ticker symbol or exchange has been provided.
Max Chen contributed to this article.