Gold Stocks ETF Costs Fees and Returns

Investing in gold stocks through an ETF can be a smart move, but it's essential to understand the costs, fees, and potential returns involved.

The average expense ratio for gold stocks ETFs is around 0.5% to 1.0% per annum.

This may seem small, but it can add up over time, eating into your investment returns. For example, if you invest $10,000 in a gold stocks ETF with a 0.5% expense ratio, you'll pay $50 per year in fees.

You can expect the returns on gold stocks ETFs to be relatively stable, with some fluctuations due to market conditions.

Investing in gold stocks ETF can be a bit tricky due to the various indices and ETFs available, each with its own methodology.

Some gold mining indices require companies to generate at least 50% of their revenue from gold mining, while others have a lower threshold of 50% revenue from gold or silver mining.

Investors may find it helpful to consider the size of the companies being tracked, as well as their production costs, which can influence profit.

Here are some key differences between two popular gold mining indices:

By understanding these differences, investors can make more informed decisions when choosing an ETF to track their gold mining investments.

ETFs and mutual funds charge annual expense ratios ranging from 0.02% to 1% of the investment value.

Mutual funds generally have higher annual fees due to higher marketing, distribution, and accounting expenses, also known as 12b-1 fees.

ETFs are generally cheaper to operate since they don't have to buy and sell securities or maintain cash reserves like mutual funds do.

Stockbrokers may charge different commissions for the purchase and sale of ETFs and mutual funds.

Sales of ETFs in the US are subject to transaction fees that the national securities exchanges must pay to the SEC, which is $8 per $1 million in transaction proceeds as of February 2023.

Many mutual funds can be bought commission-free from the issuer, but some charge front-end or back-end loads, while ETFs do not have loads at all.

The total expense ratio of Gold ETCs is between 0.00% p.a. and 0.59% p.a., which includes insurance premium, storage costs, and additional management fees.

The DAXglobal Factsheet is a valuable resource for investors looking to dive into gold stocks. It's based on a rigorous methodology that ensures the selected companies meet certain criteria.

Companies are chosen if they generate at least 50% of their revenue from gold mining. This ensures that the ETF is focused on the gold mining industry.

Selection is also based on market capitalisation, which must be at least $500 million USD. This helps to ensure that the companies included are large and established players.

To be included, a company's average daily trading volume over the last 3 months must be larger than $2 million USD. This helps to ensure liquidity in the market.

Companies are weighted by liquidity, which helps to give a more accurate representation of the market. Each single stock's weighting is capped at 15% to prevent any one company from dominating the ETF.

Here's a summary of the key criteria:

The first gold exchange-traded product was Central Fund of Canada, a closed-end fund founded in 1961. It has been listed on the Toronto Stock Exchange since 1966 and the American Stock Exchange since 1986.

The idea of a gold ETF was first conceptualized by Benchmark Asset Management Company Private Ltd in India, which filed a proposal with the Securities and Exchange Board of India in May 2002. After delays in obtaining regulatory approval, the first gold exchange-traded fund was Gold Bullion Securities launched on the ASX in 2003.

Here's a comparison of some popular gold ETFs:

The arbitrage mechanism is a crucial aspect of ETFs that helps maintain a fair market price. It's a process that involves authorized participants (APs) buying and selling large blocks of ETF shares, called creation units, directly from the ETF issuer.

APs typically purchase creation units of 50,000 shares each, and these purchases are usually made in kind, meaning they contribute securities of the same type and proportion held by the ETF. This process helps ensure that the market price of ETF shares approximates their net asset value.

If there's strong investor demand for an ETF, its share price will rise above its net asset value, creating an opportunity for APs to make a profit by buying creation units and selling the component ETF shares in the open market. This increased supply of ETF shares eventually reduces the market price per share, eliminating the premium over net asset value.

A similar process occurs when there's weak demand for an ETF, causing its shares to trade at a discount from their net asset value. The arbitrage mechanism helps minimize this deviation and ensures that ETF shares track their net asset value.

The first gold exchange-traded product was Central Fund of Canada, a closed-end fund founded in 1961.

Central Fund of Canada has been listed on the Toronto Stock Exchange since 1966 and the American Stock Exchange since 1986.

The idea of a gold ETF was first conceptualized by Benchmark Asset Management Company Private Ltd in India, which filed a proposal with the Securities and Exchange Board of India in May 2002.

Gold Bullion Securities, the first gold exchange-traded fund, was launched on the ASX in 2003.

iShares Silver Trust, the first silver exchange-traded fund, was launched on the NYSE in 2006.

SPDR Gold Shares, a commodity ETF, is in the top 10 largest ETFs by assets under management.

If you're looking to invest in gold, you may want to consider a Gold Stocks ETF. These funds allow you to invest in gold without actually owning physical gold, which can be a more convenient and cost-effective option.

One of the main advantages of Gold Stocks ETFs is their low TER (Total Expense Ratio), which ranges from 0.00% to 0.59% p.a. This means that you'll pay less in fees compared to other investment options.

The fund size of Gold Stocks ETFs varies, with some funds having a larger size than others. For example, Invesco Physical Gold has a fund size of 16,138 million EUR, while Xetra-Gold has a fund size of 13,420 million EUR.

Here's a comparison of some of the Gold Stocks ETFs listed in the article:

In terms of currency hedge, some Gold Stocks ETFs offer this feature, which can help to reduce the impact of exchange rate fluctuations. For example, Xtrackers IE Physical Gold EUR Hedged ETC Securities and WisdomTree Physical Gold - EUR Daily Hedged both offer currency hedge in EUR.

Ultimately, the choice of Gold Stocks ETF will depend on your individual investment goals and preferences. It's always a good idea to do your own research and consult with a financial advisor before making any investment decisions.

Gold stocks ETFs have a range of performance and returns, making it essential to understand their historical and projected growth. The best-performing gold ETF over the past year was Invesco Physical Gold A, with a 1-year fund return of 44.07% as of December 31, 2024.

Some gold ETFs have outperformed others in specific time frames. For example, Invesco Physical Gold A had a 3-year return of 66.93%, while EUWAX Gold II had a 3-year return of 57.27%. The table below shows the 1-year fund returns for the top 5 gold ETFs as of December 31, 2024.

The returns of gold ETFs can vary significantly over different time periods. For instance, Invesco Physical Gold A had a 2023 return of 9.71%, while Xtrackers Physical Gold ETC (EUR) had a 2023 return of 2.72%.

The cheapest Gold ETFs/ETCs by total expense ratio are a great option for those looking to minimize their costs.

boerse.de Gold ETC takes the top spot with a total expense ratio of 0.00% p.a. EUWAX Gold and EUWAX Gold II are tied for second place, also with a total expense ratio of 0.00% p.a.

Here are the top 3 cheapest Gold ETFs/ETCs by total expense ratio:

These ETFs/ETCs are a great option for those looking to save on costs, but it's essential to consider other factors like performance and returns when making a decision.

The 1-year fund return as of 31.12.24 is a key performance metric for Gold ETFs/ETCs. The top performer is Invesco Physical Gold A with a return of 44.07%.

The table below shows the top 3 Gold ETFs/ETCs by 1-year fund return as of 31.12.24.

Invesco Physical Gold A has significantly outperformed the other Gold ETFs/ETCs in the past year.

Popular gold stocks ETFs are often associated with physical gold investments, but there are also options that track the performance of gold mining companies.

One of the most popular gold mining ETFs is the VanEck Gold Miners ETF (GDX), which owns all the major names in the mining space and has a 5-year annual return of 7.7 percent.

The expense ratio for GDX is 0.51 percent, which is relatively high compared to other ETFs. Another option is the VanEck Junior Gold Miners ETF (GDXJ), which invests in foreign small-cap mining companies that generate at least half of their revenues from gold and silver.

Here are some key statistics for GDX and GDXJ:

If you're looking to invest in gold stocks, it's essential to know which funds are the largest in terms of fund size. The largest Gold ETF/ETC by fund size in EUR is the Invesco Physical Gold A, with a fund size of 16,138 million.

The iShares Physical Gold ETC comes in second, with a fund size of 15,973 million. Xetra-Gold ranks third, with a fund size of 13,420 million.

If you're interested in gold mining ETFs, the largest one by fund size in EUR is the iShares Gold Producers UCITS ETF, with a fund size of 1,463 million. The VanEck Gold Miners UCITS ETF ranks second, with a fund size of 1,250 million.

Here is a list of the largest EUR funds:

VanEck (GDX) is a popular ETF in the global mining sector. It owns all the major names in the mining space, including those that mine for metals like silver and copper, apart from gold.

The 2024 YTD performance of GDX is 21.4 percent, while its five-year annual return is 7.7 percent. Its expense ratio is 0.51 percent.

GDX is one of the most popular ETFs, and its performance is closely watched by investors. Its holdings are diverse, with a range of companies involved in gold and other metal mining.

Here are some key statistics about GDX:

The gold stocks ETF space is vast and complex, with numerous indices and methodologies to choose from. Each index has its own unique characteristics and selection criteria.

Some of the most important gold mining indices include the DAXglobal Gold Miners, MVIS Global Junior Gold Miners, and NYSE Arca Gold Miners. These indices have varying numbers of ETFs, constituents, and selection criteria.

For instance, the DAXglobal Gold Miners index has 1 ETF, 33 constituents, and a minimum market capitalization of $500 million USD. In contrast, the MVIS Global Junior Gold Miners index has 1 ETF, 98 constituents, and a minimum market capitalization of $150 million USD.

Here's a comparison of the top 3 countries for each index:

The selection criteria for each index also vary. For example, the MVIS Global Junior Gold Miners index requires companies to generate at least 50% of their revenue from gold or silver mining, while the Solactive Global Pure Gold Miners index requires companies to generate at least 90% of their revenue from gold mining.

The index weighting and rebalancing frequencies also differ. For instance, the DAXglobal Gold Miners index uses liquidity as its weighting method and rebalances semi-annually, while the MVIS Global Junior Gold Miners index uses modified market capitalization as its weighting method and rebalances quarterly.