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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 one-year trailing total returns are BAR, SGOL, and GLDM.
- The sole holding of each of these ETFs is gold bullion.
There are 10 exclusively gold-focused ETFs 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 benchmark S&P GSCI Gold Index provided a one-year trailing total return of -1.0%, vastly underperforming the S&P 500’s one-year total return of 16.8%, as of Feb. 10, 2022. The best-performing gold ETF based on performance over the past year is the GraniteShares Gold Shares (BAR) fund. We examine the three best gold ETFs below. All numbers below are as of Feb. 10, 2022.
- Performance Over One-Year: -0.9%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 267,377
- Assets Under Management: $923.0 million
- Inception Date: Aug. 31, 2017
- Issuer: GraniteShares
BAR seeks to track the performance of the price of gold bullion minus fund expenses. The ETF is structured as a grantor trust, which may provide investors with a certain degree of tax protection. BAR is listed on NYSE Arca and can be traded through a normal brokerage account. It is a relatively inexpensive way to profit from potential increases in the price of gold compared to many other gold ETFs. The sole holding of the fund is gold bullion, which is stored in vaults in London.
- Performance Over One-Year: -1.0%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 1,201,597
- Assets Under Management: $2.5 billion
- Inception Date: Sept. 9, 2009
- Issuer: Abrdn PLC
SGOL is also structured as a grantor trust that seeks to track the performance of the price of gold bullion minus fund expenses. Like BAR, it has lower expenses than many other gold ETFs. The sole holding of the fund is gold bullion, which is stored in vaults in London and Zurich. A leading physical commodity auditor, Inspectorate International, inspects SGOL’s vaults twice a year.
- Performance Over One-Year: -1.0%
- Expense Ratio: 0.18%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 3,278,234
- Assets Under Management: $4.4 billion
- Inception Date: June 25, 2018
- Issuer: World Gold Council
Like the funds above, GLDM aims to reflect the performance of the price of gold minus fund expenses. The ETF is also structured as a grantor trust. Also, like the funds above, GLDM has a lower expense ratio than many other alternative gold commodity ETFs. GLDM tracks the London Bullion Market Association (LBMA) Gold Price as a benchmark. It provides both a cost-effective and convenient way for investors to invest in gold. The sole holding of the fund is gold bullion.
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