When the GraniteShares Gold Trust (NYSE Arca: BAR) debuted in August 2017, it immediately was one of the least expensive gold exchange traded products on the market. GraniteShares is taking that reputation seriously. A new fee reduction for BAR proves as much.
BAR debuted with an annual expense ratio of 0.20%, or $20 on a $10,000 investment, but the upstart gold ETF is now less expensive.
“Exchange-traded fund (ETF) company GraniteShares said on Monday it had cut fees on its gold-backed fund, undercutting rival offerings by the World Gold Council and the Perth Mint as price competition in the sector intensifies,” reports Reuters. “GraniteShares said it had dropped its management charge to 17.49 basis points, or 0.1749 percent of the value of an investment, from 20 basis points.”
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Increasing Competition in Gold ETFs
When BAR debuted last year, it was easily one of the least expensive gold ETFs on the market, but the competition for inexpensive gold ETFs has been intensifying and some newer products undercut BAR’s 0.20% fee.
“The World Gold Council’s SPDR Gold MiniShares and the Perth Mint’s Physical Gold ETF, both launched this year, charge 18 basis points,” according to Reuters.
Gold ETFs are struggling this year as the dollar remains strong and as the Federal Reserve has hiked interest rates three times.
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Global central banks have also been a large contributor to gold demand, and for the eighth consecutive year, central banks provided a substantial source of demand in the gold market in 2017, with net official sector activity rising by 36% to 366 tonnes, Alexander said. Additionally, Russia’s central bank has been a large buyer this year, adding nearly 29 tons in July, the largest monthly increase since November.
“Gold ETFs allow buyers to invest in physical gold without having to buy and store the metal,” reports Reuters. “GraniteShares’ gold fund, launched in August 2017, has $283 million under management – far from the SPDR Gold Trust’s $28 billion, according to Refintiv data.”
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