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Gold is a popular asset among investors wishing to hedge against risks such as inflation, market turbulence, and political unrest. Aside from buying gold bullion directly, another way to gain exposure to gold is by investing in exchange-traded funds (ETFs) that hold gold as their underlying asset or invest in gold futures contracts. Some investors view ETFs as a relatively liquid and low-cost option for investing in gold compared to alternatives such as gold futures or shares of gold mining companies. Still, the price of gold can see big swings, meaning ETFs that track it can also be volatile.
Key Takeaways
- The price of gold significantly underperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are BAR, AAAU, and SGOL.
- The sole holding of each of these ETFs is gold bullion.
There are 10 ETFs focused exclusively on gold that trade in the U.S., excluding leveraged or inverse funds as well as those with under $50 million in assets under management (AUM). These funds either invest directly in gold bullion or in gold futures contracts, as opposed to companies that mine for the metal. The price of gold futures decreased by 9.1% over the past 12 months, vastly underperforming the S&P 500’s 1-year total return of 34.9%, as of Aug. 16, 2021. The best-performing gold ETF, based on performance over the past year, is the GraniteShares Gold Trust (BAR). We examine the 3 best gold ETFs below. All numbers below are as of Aug. 16, 2021.
- Performance over 1-Year: -8.0%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 329,652
- Assets Under Management: $1.0 billion
- Inception Date: Aug. 31, 2017
- Issuer: GraniteShares
BAR seeks to track the performance of the price of gold bullion, less fund expenses. The ETF is structured as a grantor trust, which may provide a certain degree of tax protection to investors. It provides both a cost-effective and convenient way for investors to invest in gold. BAR is listed on NYSE Arca and can be traded through a normal brokerage account. Like SGOL, BAR has a lower expense ratio than many alternative gold commodity ETFs. The sole holding of the fund is gold bullion, which is stored in vaults in London.
- Performance over 1-Year: -8.1%
- Expense Ratio: 0.18%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 347,692
- Assets Under Management: $370.2 million
- Inception Date: July 26, 2018
- Issuer: Goldman Sachs
AAAU aims to reflect the performance of the price of gold, less fund expenses. Like BAR above, AAAU is also structured as a grantor trust. The sole holding of the fund is gold bullion, which is stored in vaults in London. On Dec. 4, 2020, Goldman Sachs Asset Management, L.P. became the sponsor of the trust, and the name of the trust was changed from Perth Mint Physical Gold ETF to Goldman Sachs Physical Gold ETF.
- Performance over 1-Year: -8.2%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 970,898
- Assets Under Management: $2.3 billion
- Inception Date: Sep. 9, 2009
- Issuer: Standard Life Aberdeen
SGOL also is structured as a grantor trust that seeks to track the performance of the price of gold bullion, less fund expenses. Like BAR, it’s priced lower than many other gold ETFs. The sole holding of the fund is gold bullion, which is stored in vaults in London and Zurich. SGOL boosts transparency by posting the serial number of the bars in its vaults. It held 1.3 million ounces of gold as of June 30.
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