Gold gained 9% in Q1 2023, but see-sawed on bond market volatility. A surge in March to record the highest monthly inflows since 2019, reversed two weak months for global gold ETFs and futures investment.
The recent surge in gold is impressive. Investing in gold has never been easier, with some gold ETFs providing a simple, cost-efficient way to add some gold exposure to your investment portfolio.
Which gold ETF is best?
1. SPDR Gold Shares ETF (GLD, 02840HK, O87SI)
SPDR Gold Shares ETF is one of the most popular ETFs available. The fund invests in physical gold, and its performance is highly correlated to gold spot prices.
SPDR Gold Shares ETF was founded on 18th November 2004. It’s domiciled in the US, however, the countries of registration include Singapore, the US, and Hong Kong.
The SPDR Gold Shares fund offers you an opportunity to take part in the gold bullion market. The SPDR Gold Share main attributes include:
It’s readily available on the Singapore Stock Exchange
The main custodian of the Gold shares is the HSBC Bank PLC.
The transaction costs are lower compared to purchasing, storing, and insuring physical gold.
The process of tracking the NAV, holdings, and market capitalisation is transparent via the spdrgoldshares.com website.
You can trade the gold shares just like you would do with ordinary shares in either USD or SGD currencies.
Other than that, the SPDR Gold Shares are held in SPDR Gold Trust which was established under the New York Law.
The main objective of the Gold Trust is for the Shares to reflect the performance of the gold bullion NAV minus the Trust’s expenses.
The shares are traded on the Singapore Securities Exchange (SGX-ST), NYSE Arca, Inc, and the Stock Exchange of Hong Kong Limited (SEHK).
It’s also worth noting that this is the first gold ETF that you can purchase with SGD under the code GSD.
The current NAV of SPDR Gold Shares ETF stands at $186 to deliver a market capitalisation of $59,893.28M.
2. iShares Gold Trust (NYSEARCA:IAU)
The investment objective of the iShares Gold trust seeks to reflect the performance of the price of gold. It tracks the price of gold minus expenses and uses the value of gold bars held in multiple vaults around the gold.
The fund was launched on 21st January 2005 to allow investors to escape the logistics associated with holding physical gold.
The primary exchange for the ETF is NYSE Arca which uses a Grantor Trust structure. Because of this, the ETF is very stable and a great choice if you are looking for gold investments.
3. Aberdeen Standard Physical Gold Shares ETF (NYSEARCA:SGOL)
Aberdeen Standard Physical Gold Shares ETF is under the management of Aberdeen Standard Investments ETFs Sponsor LLC. Its main objective is to invest in commodity markets, primarily gold.
The ETF seeks to track the price and performance of gold bullion minus expenses.
It was launched on 1st September 2009 and is currently domiciled in the US. Additionally, the fund has gold bullion reserves held in physical vaults in the UK and Switzerland.
The current NAV stands at $19.08 to deliver a market capitalisation of $2.39 billion.
4. SPDR Gold Minishares Trust (NYSEARCA:GLDM)
The SPDR Gold Minishares Trust was formed to track the price of gold minus expenses and liabilities. The trust holds gold bullion bars in a vault in London.
The fund was launched on 25th June 2018 by the World Gold Council. The primary exchange is NYSE Arca and uses a Grantor Trust structure.
5. GraniteShares Gold Trust (BAR)
The GraniteShares Gold Trust ETF seeks for the value of the shares to correspond to the price of gold held in the vaults by the Trust minus expenses and liabilities.
GraniteShares Gold Trust was launched on 31st August 2017 to offer a convenient way to access the gold market. The GraniteShares Gold Trust has a Grantor Trust structure, which may offer tax protection for investors.
One of the key highlights of this ETF is that the Trust holds LBMA-good delivery bars in a London-domiciled vault. In addition, the Trust publishes the list of gold bars in its vault for investors and the general public.
To enhance transparency, there is an audit conducted semi-annually to ensure it has a verifiable amount of gold in its vaults.
6. ProShares Ultra Gold (UGL)
ProShares Ultra Gold ETF seeks to track investment results that replicate to 2x the daily performance of the Bloomberg Gold SubindexSM Index. The ETF’s objective is to invest under standard market conditions in financial instruments based on the benchmark.
Worth noting, the Bloomberg Gold SubindexSM is a sub-index of the Bloomberg Commodity Index whose objective is to reflect the investment results of gold as estimated by the price of COMEX gold futures contracts.
Essentially, it’s a rolling index that does not hold physical gold.
The ProShares fund was launched on 1st December 2008 and currently operates at an expense ratio is 0.95%
In the fund, you invest in gold shares at a low cost just like you would in physical gold, but with fewer logistics to deal with.
7. VanEck Vectors Gold Miners ETF (GDX)
GDX is one of the most popular ETFs in the global mining sector. The ETF invests in gold mining equities worldwide. The price of the ETF is linked to the current price of gold.
The fund owns all the major names in the mining space. Apart from gold, some of these firms also mine for metals like silver and copper.
8. VanEck Vectors Junior Gold Miners ETF (GDXJ)
This fund invests in foreign small-cap mining companies that generate at least half of their revenues from gold and silver. About 50 percent of these companies are based in Canada.
9. ProShares UltraShort Gold (GLL)
This ETF offers 2x daily shot leverage to the Gold bullion, making it a powerful tool for investors with a bearish short-term outlook for gold bullion. Investors should note that GLL’s leverage resets on a daily basis, which results in compounding of returns when held for multiple periods. GLL can be a powerful tool for sophisticated investors, but should be avoided by those with a low risk tolerance or a buy-and-hold strategy.
Gold ETFs in the Australian market
1. Global X Physical Gold ETF (ASX: GOLD)
This is the largest gold ETF on the ASX, with a total fund size of more than $2.5 billion. As the name suggests, it is backed by physical gold, which is stored in the JPMorgan Chase Bank vaults in London.
The fund charges an annual management fee of 0.4% per annum, which means you would pay just $4 for every $1,000 invested in the fund each year. It is also possible to redeem your units in the fund for gold bullion (for an extra fee), although you would need to first open an account with a gold bullion dealer.
2. Perth Mint Gold ETF (ASX: PMGOLD)
The Perth Mint Gold ETF is also backed by physical gold, which is held by the Perth Mint in Western Australia. The fund manages about $650 million in gold investments, making it far smaller than the Global X Physical Gold ETF. However, it charges a much lower management fee of just 0.15% per annum, making it a cheaper option than its larger rival.
It also allows you to redeem your units for gold in a Perth Mint depository account, although you would then need to pay ongoing storage fees.
3. BetaShares Gold Bullion ETF (ASX: QAU)
The BetaShares Gold Bullion ETF is also backed by physical gold stored at the JPMorgan Chase vaults in London. In addition to tracking the price of gold, the BetaShares Gold Bullion ETF also tries to hedge against movements in the AU/US exchange rate to reduce some of the volatility in its market price.
It is the smallest of these gold ETFs, with about $450 million in net assets. It also charges the highest annual management fee (0.59%). However, its return over the past 12 months has been lower than other ASX gold ETFs, likely because of the impacts of the currency hedge.
4. VanEck Gold Bullion ETF (ASX: NUGG)
This gold ETF represents an investment in gold bullion, backed by physical gold bars produced by Australian gold miners.
Investors get the added incentive of being able to convert their exchange-traded fund (ETF) holdings into physical gold.