Hedge fund manager John Paulson reduced his holdings in the world’s largest gold exchange traded funds by 36% in the third quarter, according to regulatory filings.

Paulson & Co. cut its holdings in the $72.4 billion SPDR Gold Shares (NYSEArca: GLD) to 20.3 million shares from 31.5 million at the end of the second quarter, Reuters reported Tuesday. Based on current prices, Paulson unloaded about 1.1 million ounces of gold valued at nearly $2 billion, according to the article.

“Paulson’s motivation to sell some of his stake was unclear, but analysts said he might be transferring positions from SPDR to other holdings to better shield his positions or cut management fees charged by the SPDR,” Reuters reported, adding the fund could also be selling gold to meet fund redemptions.

Paulson’s big stake in the gold ETF has helped offset losses in financial stocks this year. [Paulson’s Gold ETF Bet]

Some hedge funds use the gold ETF and others like iShares Gold Trust (NYSEArca: IAU) to get liquid exposure to the precious metal. George Soros’ hedge fund has scaled back its investments in gold ETFs this year, but reported added to his stake in SPDR Gold Shares in the third quarter. [Soros Again Trims Gold ETF Holdings; Paulson Lets It Ride]

Some ETFs hold physical bullion, while others invest in gold futures contracts. Investors should also note that gains on precious metal ETFs can be taxed at higher rates than stocks.

SPDR Gold Shares has an expense ratio of 0.4%, compared with 0.25% for iShares Gold Trust, which holds nearly $10 billion in assets.

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