Gold prices (CM:XAUUSD) have risen 12.7% so far in 2024. It has gained popularity as an investment option owing to persistent macro turmoil. Since the onset of the COVID-19 pandemic, gold prices have surged over 73% in the past five years. It is wise to have some exposure to the precious yellow metal in your portfolio to ensure diversification and as a hedge against inflation. Having said that, buying the physical gold commodity has its challenges. Investors can include gold in their portfolios by investing in Gold ETFs. We used TipRanks’ ETFs Comparison tool for Spot Gold ETFs to compare SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and SPDR Gold MiniShares Trust (GLDM) to determine the best pick.
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It is vital to note that since all spot Gold ETFs track the prices of the same physical metal, gold, their returns are similar, as seen in the chart below. The minute variances in the returns of the Gold ETFs are due to differences in their management expenses. Investing in Gold ETFs has several benefits, including liquidity, ease of trading, transparency on gold prices, and convenience and safety. Moreover, it is cheaper to invest in Gold ETFs than buying/selling and storing gold bullion.
TipRanks’ ETF Comparison Tool enables the comparison of ETFs based on several parameters, including AUM (assets under management), funds flow, expense ratio, technicals, and performance over different time periods.
SPDR Gold Shares (GLD)
The SPDR Gold Shares ETF is the world’s largest physical gold-backed ETF, with an AUM (assets under management) of $61.31 billion. The higher AUM also implies a higher price per unit of the fund, making the purchase of the GLD units a bit expensive. The fund was launched in November 2004 to track the price of gold by tracking the LBMA Gold Price PM Index.
As of June 18, GLD held 26,534,572.50 ounces of gold in the trust. Importantly, GLD carries the highest expense ratio of 0.40% among the three. Despite the high expense ratio, GLD has earned the maximum price returns in both the year-to-date period (12.71%) and the past year (19.87%). However, the fund witnessed net outflows of $513 million in the past three months.
SPDR Gold MiniShares Trust (GLDM)
The SPDR Gold MiniShares Trust boasts the lowest expense ratio of 0.10% for a gold ETF in the industry. GLDM has an AUM of $7.38 billion, notably lower than the GLD ETF. The lower AUM also translates into lower NAV, making it easier for investors to have long-term exposure to gold at a relatively cheaper ownership cost. Launched in June 2018, GLDM also tracks the gold prices through the LBMA Gold Price PM index.
As of June 18, GLDM held 3,172,941.60 ounces of gold in the basket. Out of the three ETFs, GLDM has the second-best performance, with year-to-date returns of 12.39% and one-year return of 19.68%. In the past three months, GLDM saw net inflows of $110 million.
iShares Gold Trust (IAU)
The iShares Gold Trust aims to reflect the price of gold bullion by tracking the LBMA Gold Price PM Index. Launched in January 2005, IAU has an AUM of $28.40 billion and an expense ratio of 0.25%.
As of June 18, IAU held 12,188,952.03 ounces of physical gold in the trust. The IAU ETF has delivered a year-to-date return of 12.35% and a one-year return of 19.55%. Similar to GLD, IAU saw net outflows of $617 million in the past three months.
Concluding Thoughts
The SPDR Gold Shares ETF appears to be the best pick of the three Spot Gold ETFs based on slightly higher year-to-date and one-year price performances and the largest AUM base. GLD seems to be well-positioned to benefit from the growing demand for the shiny metal.
