Gold-backed exchange-traded funds (ETFs) have emerged as a popular way for all types of investors to gain exposure to the gold market without owning physical bars and coins.
Learn the top-performing gold ETFs that could boost returns and reduce overall risk in investment portfolios.
Gold-backed ETFs are funds that hold physical gold bullion as their underlying asset. The ETFs purchase gold bars and hold them in secure vaults, and investors can then buy shares of the ETF on stock exchanges just like regular stocks. The value of the shares tracks closely to the spot price of gold.
Gold ETFs offer the flexibility to trade during market hours, aligning with the convenience and accessibility of stock trading.
The SPDR Gold Shares ETF (GLD) is one of the most popular Gold-backed ETFs, with over $50 billion in assets under management. Launched in 2004, GLD aims to reflect the performance of the price of gold bullion. The ETF holds physical gold bars stored in secure vaults and vaults inspected biannually by independent auditors.
GLD offers excellent liquidity with an average daily trading volume of over 7 million. The fund carries an expense ratio of 0.40%, lower than many competing products. GLD tracks gold spot prices closely and has returned around 7.5% over the past 12 months.
SPDR Gold Shares ETF is a great low-cost choice for investors seeking direct exposure to gold prices.
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The iShares Gold Trust (IAU) is another large gold-backed ETF with nearly $30 billion in net assets. The fund launched in 2005 and aims to reflect the daily performance of the price of gold. IAU holds physical gold bullion in secure vaults.
With an expense ratio of just 0.25%, IAU is one of the most cost-effective gold ETF options available. It has high liquidity, with an average volume of over 11 million shares changing hands each day.
IAU has delivered a 1-year return of around 8.5%, closely matching the spot gold price. The fund is ideal for cost-conscious investors looking for a basic gold allocation.
Aberdeen Standard Physical Gold Shares (SGOL) is a gold ETF managed by Abrdn, a leading global asset manager. The fund has over $2.5 billion in AUM invested directly in physical gold bullion stored in secure vaults.
SGOL has an expense ratio of 0.17%, making it among the cheapest gold ETF options. It has delivered strong returns of 8.8% over the past year, outperforming many comparable gold funds.
While SGOL has lower trading volumes than larger funds like GLD and IAU, it remains relatively liquid. SGOL can be an excellent low-cost choice for a simple physical gold allocation.
Check this article: Do ETFs Pay Dividends?
The Sprott Physical Gold Trust (PHYS) is a closed-end gold ETF managed by Canadian investment firm Sprott Asset Management. It offers exposure to physical gold bullion stored at the Royal Canadian Mint.
PHYS holds over $3.3 billion in gold assets and has one of the lowest expense ratios at 0.42%.
The fund is structured as a trust rather than an actual ETF, meaning shares reflect net asset value rather than trading directly at market prices. Trading volumes are thin compared to most gold ETFs.
Over the past year, PHYS has returned around 9.5%, outperforming gold spot prices. Investors who prioritize minimizing fees may favour PHYS but should note the differences in structure compared to other standard gold-backed ETFs.
Rather than holding physical gold, this fund invests in global gold mining companies. With $12 billion in net assets, GDX is the largest gold miners ETF.
GDX provides leveraged exposure to gold prices by reflecting the performance of its basket of over 50 gold miners. Industry leaders like Newmont, Barrick Gold, and Franco-Nevada dominate the portfolio. GDX has an expense ratio of 0.51% and an average daily volume of over 23 million shares.
The mining equity focus has led GDX to significantly outperform spot gold prices, with total returns of nearly 20% over 12 months. For investors bullish on gold and willing to take on more risk, GDX can provide magnified exposure compared to physical gold ETFs.
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GraniteShares Gold Trust (BAR) is a relatively new gold-backed ETF launched in August 2017. It holds physical gold bars in secure vaults and aims to provide cost-effective exposure to gold prices. BAR has an expense ratio of just 0.17% and over $1 billion in assets under management.
The fund has closely tracked spot gold prices over the past year, returning around 8%. BAR's low costs, strong tracking ability, and growing size make it an appealing option.
The Invesco DB Gold Fund (DGL) takes a unique approach among gold-backed ETFs by tracking gold futures contracts rather than physically holding gold. This provides exposure to gold prices by replicating a position in near-term futures.
DGL has delivered solid 1-year returns of 8.2%. With an expense ratio of 0.75%, costs are higher than physical gold-backed ETFs but may appeal to tactical investors.
The U.S. Global GO GOLD ETF invests in companies producing and exploring precious metals like gold, silver, platinum, and palladium. With $285 million in net assets, GOAU provides targeted exposure to gold miners. It has significantly outpaced physical gold over the past year, with returns above 15%. The 0.6% expense ratio is on par with similar miner ETFs.
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Gold-backed ETFs can be an attractive option for traders seeking to gain gold price exposure without the hassles of owning physical bars and coins. As outlined above, there are a variety of high-performing gold ETFs to consider, from low-cost physical gold funds like GLD and IAU to leveraged mining equity products like GDX.
While past performance does not guarantee future results, many ETFs have historically tracked gold prices closely, offering advantages like intraday liquidity and transparency.
For investors interested in incorporating gold into their portfolio, researching the available gold ETF products can help identify the right fund that aligns with their investment objectives and risk tolerance.
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