Gold is a popular commodity for investors who desire to hedge against inflation, market volatility, and political turmoil. In addition to purchasing gold bullion directly, investors may obtain exposure to gold through investing in gold exchange-traded funds (ETFs) or by buying gold futures contracts.
Some investors regard ETFs as a reasonably liquid and low-cost alternative to gold futures and shares of gold-mining firms for investing in gold. Gold’s price is subject to significant fluctuations, and thus gold-tracking ETFs may likewise be volatile.
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- The gold price has behaved similarly to the broad U.S. stock market during the past year.
- GLDM, BAR, and SGOL are the exchange-traded funds (ETFs) with the highest one-year trailing total returns.
- Each of these ETFs consists only of gold bullion.
Ten gold-focused ETFs trade in the United States, omitting leveraged and inverse funds and those with less than $50 million in AUM (AUM). In contrast to corporations that mine the metal, these funds invest directly in gold bullion or gold futures contracts.
As of May 4, 2022, the price of gold, as measured by the benchmark S&P GSCI Gold Index, has increased by 4.6 percent over the last year, matching the S&P 500’s one-year total return of 4.7 percent. SPDR Gold MiniShares Trust (GLDM) is the best-performing gold exchange-traded fund (ETF) based on one-year performance.
Gold SPDR MiniShares Trust (GLDM)
GLDM seeks to replicate the performance of the gold price, net of fund fees. The ETF is organized as a grantor trust, which may provide some tax protection for investors. GLDM offers a lower expense ratio than several comparable gold commodities ETFs, similar to BAR and SGOL on our list (see more below). GLDM follows the London Bullion Market Association (LBMA) Gold Price as a benchmark. It offers clients a cost-effective and convenient option to invest in gold. The fund’s sole holding is gold bullion.
Similar to GLDM, BAR tries to replicate the performance of the gold bullion price, net of the fund’s expenditures. In addition, it is organized as a grantor trust, affording some tax protection. The exchange-traded fund is listed on the NYSE Arca and may be traded using a standard brokerage account. Compared to other gold ETFs, it is an affordable option to profit from prospective price rises in gold. The fund’s sole asset is gold bullion, housed in London vaults.
SGOL, like the two preceding funds, is formed as a grantor trust that aims to follow the performance of the price of gold bullion, net of fund expenditures. As previously indicated, it also offers lower expenses than many other gold ETFs. The fund’s sole asset is gold bullion stored in London and Zurich vaults. A prominent physical commodity auditor, Inspectorate International conducts twice-yearly inspections of SGOL’s lockers.