iShares Gold ETF Explained: A Comprehensive Guide

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Posted Dec 22, 2024

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The iShares Gold ETF is a popular investment option for those looking to diversify their portfolio with a physical asset. It's a fund that tracks the price of gold.

Investors can buy and sell shares of the ETF, which represents a claim on a portion of the fund's gold holdings. The fund's gold is stored in a secure facility and is audited regularly.

The iShares Gold ETF has a low expense ratio, making it an attractive option for investors.

Additional reading: Dsp Gold Etf Fund of Fund

What is iShares Gold ETF?

The iShares Gold Trust, also known as IAU, is a popular option for investors looking to track the spot price of gold. It invests in gold bars held in vaults around the world.

One key advantage of IAU over GLD is its lower expense ratio, which is 0.25 percent. This means that investors pay less in fees to own shares of IAU compared to GLD.

IAU has performed well in recent years, with a 2024 YTD performance of 29.6 percent and a five-year annual return of 12.5 percent.

Here are some key statistics to keep in mind when considering IAU:

  • 2024 YTD performance: 29.6 percent
  • Five-year annual return: 12.5 percent
  • Expense ratio: 0.25 percent

Fund Details

Credit: youtube.com, The 7 Best Gold ETFs for 2025 (GLD, IAU, & more)

The iShares Gold ETF is a popular investment option that allows you to gain exposure to gold prices.

It has an expense ratio of 0.25%, which is relatively low compared to other gold ETFs.

The fund is listed on the London Stock Exchange and has a total net asset value of over $30 billion.

Investors can buy and sell the fund through various online brokers or financial institutions.

The fund's holdings are comprised of physical gold bars stored in secure vaults around the world.

Fund Management

The Fund Management team is made up of experienced professionals who oversee the day-to-day operations of the ETF. The sponsor of the ETF is World Gold Trust Services.

SPDR issues a number of popular ETFs, from funds that track the major stock indexes to fixed-income ETFs. The marketing agent is State Street Global Markets.

BNY Mellon Asset Servicing serves as the trustee of the ETF, ensuring that all regulatory requirements are met. The custodian of the physical gold is HSBC Bank.

SPDR is likely the most visible company in the ETF space, with a wide range of products available to investors.

Take a look at this: Spdr Gold Shares Etf Gld

Fund Characteristics

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The GLD fund is a pioneer in tracking the price of gold, launching in 2004 and providing investors with a convenient way to invest in gold.

Its expense ratio is 0.4%, which, while not the lowest, is still relatively affordable for most investors.

The iShares Gold Trust, for instance, has an even lower expense ratio of 0.25%, but the difference may not be significant for many investors.

As of June 19, 2020, the fund had a substantial net asset value of $62.4 billion, demonstrating its popularity among investors.

Investors can easily buy shares in the fund through any broker, and they trade on the NYSE Arca exchange.

Investment Considerations

Investors can use the iShares Gold ETF as a way to own an interest in physical gold without the risks and costs of owning actual gold bullion.

This fund is an easy way to diversify a portfolio with a precious metal commodity, and historically, gold has held its value well during times of financial instability.

Credit: youtube.com, Gold ETF vs Physical Gold Bullion -- What You NEED To Know!

The ETF's low beta of around -0.02 compared to the market average of 0.32 makes it less volatile than the overall market.

You can speculate on the price of gold by buying and selling shares of the ETF, which is much easier than buying and trading physical gold.

Gold futures contracts involve a substantial amount of leverage, which can amplify both profits and losses, but shares of the ETF are much more accessible for most investors.

Investors should be careful when making a long-term investment in the fund, as any profits are taxed at a much higher rate of 28% versus the normal long-term capital gains rate of 15% or 20%.

One way to get around this tax wrinkle is to exit any position in under a year, or hold the shares in an IRA or another tax-deferred retirement account.

Investment Process

The investment process for iShares Gold ETF is straightforward. You can buy and sell shares through a brokerage account or a trading platform.

You can invest in iShares Gold ETF by adding it to your existing portfolio, just like you would with any other stock.

The minimum investment required is $100, but there is no maximum investment limit.

Investment Information

Credit: youtube.com, GLD vs IAU - What's The Difference Between Them? (Which Gold ETF Is Suited For Your Investment?)

Gold has historically held its value well during times of financial instability, since it is not correlated with the stock markets.

Investors can use the iShares Gold ETF as a way to diversify a portfolio with a precious metal commodity. This can be especially attractive to those who want to minimize risk in their investments.

The fund is an easy way to own an interest in the physical asset without the risks and costs of owning actual gold bullion.

Listings

Investing in the stock market can be a complex process, but knowing where to start is key. You can find listings for various exchanges, including the NYSE Arca, Bolsa Mexicana De Valores, and Santiago Stock Exchange.

The NYSE Arca lists IAU under the ticker USD, with a listing date of 28/Jan/2005 and a SEDOL of BMDB791. The NYSE Arca listing also has a Bloomberg Ticker of -.

You can also find IAU listed on the Bolsa Mexicana De Valores under the ticker MXN, with a listing date of 30/Jun/2009 and a SEDOL of BKP74P8. The Bolsa Mexicana De Valores listing also has a Bloomberg Ticker of IAU* MM.

Here are some key listings for IAU:

ExchangeTickerCurrencyListing DateSEDOLBloomberg Ticker
NYSE ArcaIAUUSD28/Jan/2005BMDB791-
Bolsa Mexicana De ValoresIAUMXN30/Jun/2009BKP74P8IAU* MM
Santiago Stock ExchangeIAUCLP28/Jan/2005--

These listings provide a starting point for your investment research and can help you make informed decisions about where to invest your money.

Premium/Discount

Credit: youtube.com, ETF at Premium or Discount?

The premium/discount of an investment can be a crucial factor in determining its value.

The total return of an investment can be higher than its market price, as seen in the 1-year return of 40.25% compared to the market price of 42.04% on September 30, 2024.

However, this disparity can be due to various factors, including fees and expenses.

A reference benchmark can provide a baseline for comparison, with a 1-year return of 40.60% on September 30, 2024.

The after-tax pre-liq. return is often lower than the total return, as seen in the 1-year return of 40.25% compared to 23.83% after taxes on September 30, 2024.

Here's a breakdown of the premium/discount over different time periods:

1y3y5y10yIncept.
Total Return (%)40.2514.4111.837.759.36
Market Price (%)42.0414.1512.027.819.36
Reference Benchmark40.6014.7012.118.019.67
After Tax Pre-Liq. (%)40.2514.4111.837.759.36
After Tax Post-Liq. (%)23.8311.319.456.318.15

Comparison and Alternatives

If you're considering investing in the iShares Gold Trust, you might be wondering about its competitors and alternatives. The iShares Gold Trust isn't the only game in town when it comes to tracking the price of gold.

Credit: youtube.com, What Dave Ramsey Doesn't Like About Investing In ETFs

There are a few other ETFs that also track the price of gold, including the Aberdeen Standard Gold ETF, which has a lower expense ratio of 0.17% but only has around $2.05 billion in net assets as of June 2020.

The SPDR Gold Shares (GLD) is by far the most popular and most liquid of the gold ETFs, making it a good option for those looking for a well-established and easily tradable investment.

Competitors and Alternatives

There are a few other ETFs that track the price of gold, including the iShares Gold Trust, which has a lower expense ratio than GLD.

The Aberdeen Standard Gold ETF is another alternative, with an expense ratio of 0.17% but only around $2.05 billion in net assets as of June 2020.

GLD is the most popular and most liquid of the gold ETFs, making it a go-to choice for investors.

Here are some key stats on the main competitors and alternatives:

ETFExpense RatioNet Assets (as of June 2020)
iShares Gold Trust (IAU)Lower than GLDNot specified
Aberdeen Standard Gold ETF (SGOL)0.17%$2.05 billion
GLD (SPDR Gold Shares)Not specifiedNot specified

The lower expense ratio of the iShares Gold Trust and Aberdeen Standard Gold ETF may make them more attractive to some investors, but GLD's popularity and liquidity make it a reliable choice.

VanEck Miners

Credit: youtube.com, Top 10 Gold Miners From Gold Miners ETF GDX

VanEck Miners is a solid choice for those looking to invest in the mining sector.

The VanEck Gold Miners ETF (GDX) has a 2024 YTD performance of 21.4 percent.

One notable aspect of GDX is its diverse portfolio, which includes companies that mine not only gold but also silver and copper.

Its expense ratio stands at 0.51 percent, making it a relatively affordable option for investors.

Expand your knowledge: Vaneck Gold Miners

Frequently Asked Questions

Does BlackRock have a gold ETF?

Yes, BlackRock offers the iShares Physical Gold ETF, which provides exposure to gold through an offshore product. Click "Gold Bar List" for more information on the gold bars held by this product.

Is GLD backed by real gold?

No, GLD is not backed by physical gold, but rather by gold and cash held in the fund. This means investors own a claim on the fund's assets, not the gold itself.

Is CGL a good ETF?

CGL is considered a highly attractive investment due to its performance in uncertain economic environments. It's a good option for those seeking a hedge against inflation and geo-political tensions.

Krystal Bogisich

Krystal Bogisich

Lead Writer

Krystal Bogisich is a seasoned writer with a passion for crafting informative and engaging content. With a keen eye for detail and a knack for storytelling, she has established herself as a versatile writer capable of tackling a wide range of topics. Her expertise spans multiple industries, including finance, where she has developed a particular interest in actuarial careers.

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