During the go-go days of growth, gold exchange-traded fund investments weren’t all that popular in many portfolios. But thanks to recent market uncertainty, precious metals have gotten their glitter back as investors look for safe havens amid the volatility.
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One of the biggest drivers lately is, of course, inflation. Historically, gold has been a go-to haven for many to avoid the decline in purchasing power we see in currencies like the dollar or euro, and instead find a commodity with a “store of value.” Alongside inflation is the risk of rising interest rates to fight the influence of rising prices. Considering the pace of interest rate increases — as well as how long it has been since we’ve seen sustained and significant moves like this from central banks — some think the global economy is in for some serious pain as consumers and businesses adjust. In such a risk-off environment, it’s not cash that’s king — it’s gold.
“Given gold’s higher volatility, you don’t need a large allocation. We typically have position sizes ranging from 0.5% to 2%,” says Dave Grecsek, managing director in investment strategy and research and partner at wealth management firm Aspiriant.
If you’re looking to invest in gold amid rising inflation and rising interest rates, then consider one of the following funds:
| Gold ETF | Expense ratio |
| SPDR Gold Shares (ticker: GLD) | 0.4% |
| SPDR Gold MiniShares (GLDM) | 0.1% |
| iShares Gold Trust (IAU) | 0.25% |
| VanEck Merk Gold Trust (OUNZ) | 0.25% |
| VanEck Vectors Gold Miners ETF (GDX) | 0.51% |
| Goldman Sachs Physical Gold ETF (AAAU) | 0.18% |
| Abdrn Precious Metals Basket Shares ETF (GLTR) | 0.60% |
Largest Gold ETF: SPDR Gold Shares (GLD)
The largest gold exchange-traded fund, or ETF, by a wide margin is the SPDR Gold Trust, the go-to way for investors looking to play the precious metal. It boasts roughly $59.6 billion in assets under management, roughly twice that of the next closest gold ETF, and averages about 9 million shares traded daily. It’s not the cheapest option out there based on annual expenses, but it is definitely one of the most liquid and established options. And as the fund is benchmarked to physical gold, you can get a direct play on gold bullion prices via this ETF. The fund charges 0.4% in annual expenses, or $40 on $10,000 invested.
Cheapest Gold ETF: SPDR Gold MiniShares (GLDM)
With roughly $6.4 billion under management, this sister fund offered by SPDR isn’t quite as large but does offer a significantly smaller expense ratio of just 0.1% annually, compared with four times that for the prior fund. As an added bonus for small-time investors, it trades at around $39 per share — meaning that you don’t need thousands or even hundreds of dollars to gain exposure to physical gold. The beauty of ETFs is that all you need to afford is a single share to invest strategically in gold.
[READ: How to Invest in Commodities]
Other Gold ETFs
Being the biggest or the most affordable option does have its merits when it comes to precious metals ETFs. But as with all investments, sometimes the most popular options are not the right ones for your personal portfolio or strategic goals.
The following five gold ETFs may fit in better, depending on what you’re trying to achieve:
iShares Gold Trust (IAU)
IAU is Aspiriant’s gold fund of choice, according to Grecsek. They like it because it “provides convenient and cost-effective exposure to physical gold.”
Like the aforementioned ETFs, IAU is benchmarked to the price of gold bullion. It costs a bit more than GLDM but less than GLD at 0.25%, but is currently trading for the lowest share price of all three at just over $37. It also boasts nearly $29 billion in assets and an average 30-day trading volume of about 4.5 million, making it a highly liquid option.
VanEck Merk Gold Trust (OUNZ)
This $727 million fund from VanEck takes physical gold to another level by allowing investors to redeem their funds and then take delivery of physical gold based on the amount they have in this ETF. The minimum shipment size is 1 ounce, and there are obviously fees and delays for shipping. But the option for physical delivery if and when you want it makes this fund attractive to some.
VanEck Vectors Gold Miners ETF (GDX)
Another VanEck fund that makes the list is this stock-focused option. While not linked directly to gold bullion, it allows investors to get diversified exposure to some of the largest publicly traded gold mining companies. It comprises about 50 miners, including Newmont Corp. (NEM) and Barrick Gold Corp. (GOLD).
Goldman Sachs Physical Gold ETF (AAAU)
AAAU is another cost-effective option for gold investors who want an ETF backed by physical gold with an expense ratio of 0.18%. It’s also trading at under $20 per share, but is the smallest fund on this list with only $672.6 million in assets and a relatively small average trading volume of $1.8 million.
Abdrn Precious Metals Basket Shares ETF (GLTR)
If you want diversification, but you’re thinking about multiple precious metals instead of multiple gold miners, then consider this fund with a sparkly ticker that offers investors a direct stake in physical gold, silver, palladium and platinum.
Gold makes up about 60% of the portfolio and silver about 27%, so it’s still biased toward the most popular hard assets. Still, if you’re serious about the appeal of commodity investing, this one-stop fund may save you the cost and complexity of buying into these metals individually. Just be aware of the small trading volume — barely 43,000 on average — which could make it harder to get into and out of this fund.
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Update 05/30/23: This story was published at an earlier date and has been updated with new information.
