The gold ETCs can be bought and sold like shares and are backed by physical gold bullion.
So far two allocations have been made to ETCs held by exchange traded fund (ETF) and commodities specialist ETF Securities.
Will Rhind, head of UK and Irish sales at the fund manager, said the moves echoed much broader usage of ETFs or ETCs by US and Dutch funds.
“A couple of funds are doing this at present and we are in talks with a couple of the larger funds about making a strategic allocation to gold too.
“The funds are using it as a hedge against financial market collapse. Also, people are starting to get very nervous about all this quantitative easing in the market, which has always led to inflation.”
Rhind described the funds offered by ETF Securities as a “clean cut” way of gaining exposure to gold that used no derivatives and had no counterparty risk.
He added that the funds involved had come to his firm direct, a consequence of widespread disinterest in ETFs by consultants, he claimed.
IShares, the leading provider of ETFs, backed this view.
Nizam Hamid, head of iShares sales strategy for Europe, said most of its pension fund clients had been direct.
Pension fund investors in iShares ETFs were choosing to invest in difficult-to-access assets, often on a tactical basis, he said.
The most popular choices were for funds with exposure to emerging markets, frontier markets and small caps stocks, particularly those assets that were illiquid.
“These are where you want to put a tactical allocation in place, but where you do not have the time to go off and find the right mandate for a short period of time,” added Hamid.
However, investment consultants are sceptical that ETFs will catch on with large pension funds.
Consultant at Hewitt Associates Peter Hill said that ETFs were not cost effective for his clients.
