Surveying the Gold ETFs
July 8th 2012 at 7:00am by Tom Lydon
Traders interested in investing or hedging with gold tend to fall back on the most widely known State Street Global Advisors gold exchange traded fund, the second largest U.S.-listed ETF. However, its competitors are quietly chipping away at the behemoth’s market share.
Physically backed gold ETFs include:
- SPDR Gold Shares ETF (NYSEArca: GLD): $66.0 billion in assets; 0.40% expense ratio.
- iShares Gold Trust ETF (NYSEArca: IAU): $9.3 billion in assets; 0.25% expense ratio.
- ETFS Physical Swiss Gold Shares ETF (NYSEArca: SGOL): $1.8 billion in assets: 0.39% expense ratio.
- ETFS Physical Asian Gold Shares ETF (NYSEArca: AGOL): $71.8 million; 0.39% expense ratio.
GLD gained a solid foothold as a first mover in the gold ETF space, growing to almost seven times larger in terms of assets than its closest competitor, IAU.
More recently, though, fund flows indicate that IAU is taking market share versus GLD, writes Christian Magoon at Nasdaq.com. [Largest Gold ETF Sees Quarterly Outflow on Stronger Dollar]
Specifically, GLD saw net inflows of $1.6 billion year-to-date through July 3, while IAU gathered $568.2 million over the same period. While still less than GLD, IAU’s asset growth is quite significant, given the fund’s size.
Additionally, Magoon points out that IAU’s average volume of 4.9 million shares compared to GLD’s average volume of 10 million shares suggests that the iShares ETF is providing high liquidity as its average volumes reflect close to half that of GLD’s, with significantly less assets.
However, those trading volume numbers require some context. GLD’s share price is about 10 times that of IAU. Therefore, GLD’s notional trading volume measured in dollars, rather than shares transacted, is much higher than IAU.
GLD was trading hands at $154.38 a share on Monday afternoon, while IAU traded at $15.50 a share. When considering total trading costs and spreads, investors need to remember they need to buy or sell about 10 shares of IAU for every one share of GLD for the same-sized trade.
For more information on gold, visit our gold category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.
Story updated with data on notional trading volume.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.