Gold has been on a torrid upswing over the past few years, reflecting investors’ fears of inflation and recession. Accompanying that rise has been the increasing popularity of gold exchange traded funds (ETFs). When it comes to knowing which one you should own, though, it’s a matter of what you want.
If it’s liquidity, look at the biggest fund. To date, the most popular gold ETF has been the $52 billion SPDR Gold Shares ETF (NYSEArca: GLD). However, Blackrock is making a move to change that with its own gold ETF, reports Ian Salisbury of The Wall Street Journal. [ETF Assets in June.]
That brings us to price. Last week, Blackrock cut the fees on its $3.3 billion iShares Comex Gold Trust ETF (NYSEArca: IAU) by more than a third, to 0.25%. The lower fees make IAU a very compelling option, says Morgan Stanley ETF analyst Dominic Maister. [Gold ETFs: Ready to Explode?]
If you’re concerned with where the physical gold is held, ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) is another option. The gold in this fund is held in vaults in Zurich, Switzerland.
In addition, GLD is a lot more liquid than IAU. GLD trades $1.9 billion worth of shares to IAU’s $35 million. The higher liquidity lowers bid/ask spreads, which save investors money, especially those who trade frequently.