Gold is now offering good returns after a sluggish period, and investors who want to own the precious metals can buy gold shares in an exchange traded fund (ETF). But have you ever wondered which is the best gold ETF?
An ETF is an investment fund traded on stock changes. Most ETFs track an index, such as stock index or bond index.
Even though ETFs are a form of mutual funds, an ETF trades as a common stock on any stock exchange. The price of an ETF also changes intraday and can be bought at any time in the day. In contrast, mutual funds can only be bought at the end of the day when its net asset value (NAV) is calculated.
Best gold ETF
Here is a round up of the best gold ETFs:
- SPDR Gold Shares (GLD)
The SPDR fund buys gold bullion. It sells gold only when it needs to pay expenses to honour redemptions. Because of fund is made up of bullion, it is quite price sensitive to gold.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
A big advantage of owning gold bars is that they are not available to loan or borrow. Each share of the fund represents more gold compared to other funds which do not buy physical gold.
- iShares Gold Trust (IAU)
This fund also buys physical gold. IAU holds gold in vaults around the world. The fund is not set up to profit by selling gold when the price rises, but it is a fund for investors to buy and hold gold bullion.
This fund allows investors a cost-effective way to manage gold which they may have not been able to do at such a low cost without the fund.
- ETFs Physical Swiss Gold (SGOL)
SGOL fund entails sorting gold in a vault in Zurich. Owners of SGOL shares, only partially own the gold. The basic distinction between SGOL shares and other funds is that SGOL exclusively stores gold in vaults in Switzerland.
- GraniteShares Gold Trust (BAR)
The GraniteShares Gold Trust is one of the newest Gold ETF entrants to the market and it works on the performance of the price of gold.
- PowerShares DB Gold ETF (DGL)
DGL tracks the DBIQ Optimum Yield Gold Index Excess Return and buys futures contracts instead of actually buying the gold. DGL fund managers must constantly fight the situation of contango, where the future price exceeds the current spot market price of gold.
Why invest in gold ETFs?
Investors usually choose ETFs to diversify their risk. Some of these funds only invest in gold, so the fate of returns totally depends on how the price of gold is reacting.
Many times gold ETFs tend to outperform and yield greater returns than physical gold does. One does not have to worry about theft when buying an ETF, and it is usually easier to sell gold ETFs than physical gold.
This is why one can invest in gold ETFs easily, and research for the best gold ETF suiting an investor.