These ETFs are mostly simple, low-cost ways to hedge with gold.
Gold exchange-traded funds have performed quite well recently, as the price of their benchmark precious metal has soared nearly 13% over the last 12 months. Company stocks may juice portfolio returns in the short run, but long-term investing success relies on diversification across different asset classes. Investors have historically used gold as a hedge against market volatility, and with the Russia-Ukraine war raging and inflation high, now may be as good a time as any to follow in their footsteps. These seven gold ETFs play the precious metal in different ways, providing a hedge against volatility and uncertainty in a simple, cost-effective investment vehicle.
SPDR Gold Shares (ticker: GLD)
SPDR Gold Shares is the go-to for investors looking to play precious metals in a cost-effective way. GLD is the largest physically backed gold ETF in the world, with more than $67 billion in assets under management. Since its launch in 2004, the fund has allowed investors to purchase gold via their brokerage account or individual retirement account. The fund is benchmarked to gold bullion, giving investors an easy way to get exposure to gold prices without owning the physical metal. The 0.4% annual expense ratio, or $40 for every $10,000 invested, is especially cost-effective when you consider the price of shipping, insuring and storing gold bars or coins in a safe.
iShares Gold Trust (IAU)
Similar to GLD, iShares Gold Trust offers direct exposure to the day-to-day movement of the price of gold bullion. It’s smaller, at $32 billion in total assets, and it’s a bit younger, with an inception date of 2005, but it’s very close to a mirror image of the SPDR fund. One advantage IAU does have, however, is a lower cost, at just 0.25% in annual expenses. That saves investors about $15 annually on every $10,000 invested. IAU has a 10-year average annual return of 1.49%, which is slightly better than competitor GLD, with a 1.34% average return over the same period.
SPDR Gold MiniShares (GLDM)
In 2018, State Street launched GLDM as an alternative to GLD. The main difference between the two is that GLDM holds less gold compared with GLD. GLDM also has a lower expense ratio: 0.18%, compared with GLD’s 0.4%. The MiniShares offering is smaller in size and costs less, which may be more attractive to the retail investor looking for an affordable way to get gold exposure into their portfolio. Similar to GLD and IAU, GLDM is designed to reflect the performance of the price of gold bullion, less expenses, and has moved in lockstep with other gold ETFs since it entered the market.
Aberdeen Standard Physical Gold Shares ETF (SGOL)
Aberdeen Standard Physical Gold Shares is issued by Aberdeen Standard Gold ETF Trust. Similar to other physical gold-backed ETFs, SGOL reflects the performance of the price of gold bullion minus expenses. SGOL has an affordable expense ratio of 0.17%. This Aberdeen fund is slightly younger than its counterparts, launched in 2009, and is on the smaller side as well, with about $2.7 billion in assets. Changes made to the SGOL fund are readily reflected on the fund’s website, to give investors transparent information about the fund’s composition. Gold is held in bullion bars in vaults around the world, including in Zurich and London. A bar list is posted daily to the Aberdeen website for investor reference.
GraniteShares Gold Trust (BAR)
GraniteShares launched BAR to give cautious precious-metals investors an ETF that both holds physical gold bars and is mandated to do physical audits of its vault twice a year, ensuring that it has the proper amount of precious metal on hand. Its goal is to track the performance of gold more faithfully. With an expense ratio of just 0.17%, BAR is also one of the most affordable ETFs on the market.
Global X Gold Explorers ETF (GOEX)
Just as its name implies, Global X Gold Explorers ETF offers gold investors access to companies that are involved in gold exploration. GOEX’s 49 holdings include gold and silver producer Hecla Mining Co. (HL) and Merdeka, a miner of copper and gold that prides itself on sustainability and community development. SSR Mining, producer of gold, silver, tin and zinc, is also among the fund’s top holdings. The fund holds $55 million in assets and has an expense ratio of 0.65%. Unlike other gold ETFs on the list, GOEX allots 2% of its portfolio to the information technology sector, and it invests in companies spread across the globe, giving the fund some built-in diversification. A majority of its gold-mining holdings are in Canada, but other countries include Australia, Britain, Indonesia, China and South Africa.
ProShares Ultra Gold (UGL)
ProShares Ultra Gold invests in futures contracts and takes a leveraged position in gold. A leveraged ETF is an investment vehicle that uses debt to increase returns to shareholders, as opposed to a conventional ETF, which tracks an underlying index or commodity. A fund for gold investors seeking outsize returns, UGL aims to double the return of its benchmark, the Bloomberg Gold Subindex, in a given day. This leveraged ETF also has a daily reset feature, which adds more risk and requires investors to monitor their holding daily. UGL may be better suited as a trading tool rather than a long-term gold ETF investment.
Brace for market volatility with these seven gold ETFs:
— SPDR Gold Shares (GLD)
— iShares Gold Trust (IAU)
— SPDR Gold MiniShares (GLDM)
— Aberdeen Standard Physical Gold Shares ETF (SGOL)
— GraniteShares Gold Trust (BAR)
— Global X Gold Explorers ETF (GOEX)
— ProShares Ultra Gold (UGL)
More from U.S. News
Update 03/15/22: This story was published at an earlier date and has been updated with new information.