The World Gold Council (WGC) could introduce a new gold-backed exchange traded fund aimed at cost-conscious investors. The WGC issues the SPDR Gold Shares (NYSEArca: GLD), the world’s largest gold-backed ETF, in partnership with State Street Global Advisors (SSgA). GLD charges 0.40% per year, or $40 on a $10,000 investment.
“The World Gold Council, owner of the world’s largest gold-backed exchange traded fund (ETF), is launching a new fund with a cut-price management fee to fend off rivals with lower charges, reports Reuters, citing an unidentified source close to the issue.
GLD is the largest physically backed gold ETF on the market, providing investors exposure to gold price movement in an easy-to-use investment vehicle. The ETF is backed by physical gold bars stored in London vaults. The gold trust currently holds about 27.2 million ounces of gold, so each SDPR Gold Shares represents fractional ownership of the underlying gold.
Getting Competitive On Gold ETF Fees
The iShares Gold Trust (NYSEArca: IAU), GLD’s primary competitor, charges 0.25% per year. The GraniteShares Gold Trust (NYSEARCA: BAR) charges 0.20%. BAR debuted last August.
“GLD’s gold holdings have risen 5 percent since the start of last year while rival iShares Gold Trust (IAU.P), which is run by investment manager BlackRock (BLK.N) with a lower management fee, has grown 47 percent, by far the fastest growth among the five biggest gold ETFs tracked by Reuters,” reports the news agency.
The new ETF from the WGC, when it comes to market, is expected to have an annual expense ratio of 0.25%, making it more competitive with the aforementioned IAU. As of the end of the first quarter, global gold ETFs are on a five quarter asset-gathering streak, according to recent WGC data.
“The source said the council’s two funds were designed to appeal to different audiences, with the new product targeted at investors looking to buy and hold gold who want a low management fee, and GLD aimed at financial investors who use its scale and liquidity to trade in and out of positions cheaply,” reports Reuters.
For more information on the gold market, visit our gold category.
Tom Lydon’s clients own shares of GLD.