Exchange-traded funds, or ETFs, have existed since 1993, but became much more common in the early 2000s. Since then, gold ETFs have risen in popularity among investors who want precious metals exposure.
ETFs are similar to mutual funds in that they track assets such as stocks, bonds, currencies or commodities; a key difference is that ETFs can be bought and sold on exchanges, making them widely accessible. They provide considerable flexibility in implementing various investment strategies and in building investment portfolios.
Precious metals-focused ETFs are fairly common today, and are a good choice for investors who want to invest in metals like gold without personally trading gold futures or physical gold, such as gold coins or bars.
So which gold ETFs are the best? And which ones will provide long-term capital gains? It depends on the investor, but the five gold ETFs below may be worth considering when it comes to getting exposure to the yellow metal. According to ETFdb.com, they were the largest gold ETFs by total assets as of August 1, 2023.
1. SPDR Gold Trust (ARCA:GLD)
Total assets: US$57,343.1 million
The SPDR Gold Trust tracks the spot price of gold bullion and is determined by market forces in the 24 hour, over-the-counter market for gold. This market accounts for most global gold trade, and any quoted prices available to ETF investors reflect the latest available information.
Physical bullion comprises 100 percent of the ETF’s holdings, and its expense ratio is 0.4 percent. It offers investors a way to invest in gold that is much less costly than purchasing, storing and insuring bars or coins.
2. iShares Gold Trust (ARCA:IAU)
Total assets: US$27,907.5 million
Like the SPDR Gold Trust, the iShares Gold Trust aims to track the spot price of gold bullion. Its expense ratio is 0.25 percent, and its holdings are allocated entirely to physical gold bullion. The aim is for the trust’s value to reflect the performance of the price of gold.
The physical gold the trust holds is in vaults in New York, Toronto, London and other locations. Investors can purchase and sell shares through a traditional brokerage account throughout the trading day.
3. SPDR Gold MiniShares Trust (ARCA:GLDM)
Total assets: US$6,194.31 million
The SPDR Gold MiniShares Trust offers investors one of the lowest available expense ratios for a US-listed ETF backed by physical gold. This ETF represents fractional, undivided beneficial ownership interests in the trust, which holds only physical gold bullion and, from time to time, cash.
4. Aberdeen Standard Physical Gold Shares ETF (ARCA:SGOL)
Total assets: US$2,754.80 million
Aberdeen Standard Physical Gold Shares are issued by the Aberdeen Standard Gold Trust. The trust aims for shares to reflect the performance of the gold bullion price, minus the trust’s operating expenses. The shares trade on an exchange like any other securities, and can be created and redeemed as supply and demand for gold in the market dictates and allows.
The gold that the Aberdeen Standard Gold Trust owns is held in Zurich, Switzerland, and it conforms to the London Bullion Market Association’s (LBMA) rules for good delivery.
5. GraniteShares Gold Shares (ARCA:BAR)
Total assets: US$952.35 million
GraniteShares Gold Shares is one of the lowest-cost physically backed gold ETFs on the market. Its expense ratio is 0.17 percent. The fund is designed to track the performance of the price of gold, and holds only LBMA good delivery bars stored in a vault domiciled in London, UK.
Securities Disclosure: I, Melissa Pistilli, currently hold no direct investment interest in any company mentioned in this article.
