Morningstar Gold Rated ETFs Explained

Morningstar Gold Rated ETFs are the crème de la crème of exchange-traded funds, earning the highest rating from Morningstar, a renowned investment research firm. They have a strong track record of outperforming their peers and the broader market.

These ETFs are rigorously evaluated by Morningstar's team of analysts, who assess their investment strategy, risk management, and performance over time. They must demonstrate exceptional skill and consistency to earn a Gold Rating.

Gold Rated ETFs are typically characterized by their low fees, broad diversification, and long-term focus, making them an attractive option for investors seeking stable returns.

Bankrate selected its top gold ETFs based on specific criteria, including U.S. funds, assets under management of at least $800 million, and expense ratios under 0.60 percent.

To find the best gold ETFs, consider using Bankrate's criteria. If you're looking for more ideas, you can explore the best ETFs and how they fit into your portfolio.

The VanEck Junior Gold Miners ETF (GDXJ) is a top-performing fund, with a 2024 YTD performance of 27.6 percent. Its expense ratio is 0.52 percent.

For a more comprehensive list, you can look at the top gold ETFs selected by Bankrate. The list includes funds that meet the specified criteria.

Here are some key facts about the top gold ETFs:

To further research and find the best ETFs, you can read Morningstar's guide to ETF investing and explore the best ETFs according to your specific criteria.

If you're considering investing in gold ETFs, you're likely looking for a fund that's well-established and has a strong track record.

To find top gold ETFs, Bankrate selected funds based on certain criteria, including U.S. funds that appear in ETF.com's screener for gold or materials ETFs.

A good gold ETF typically has assets under management of at least $800 million, which provides stability and liquidity.

Expense ratios under 0.60 percent are also a key consideration, as they can save you money in the long run.

Here are some key facts about top gold ETFs:

These criteria help ensure that the fund is well-established and has a low cost, making it a good option for investors.

Gold ETF providers offer a convenient way to invest in gold without directly holding the physical metal.

Bankrate selected its top funds based on specific criteria, including U.S. funds with assets under management of at least $800 million and expense ratios under 0.60 percent.

The IRS treats physical gold as "collectibles", meaning long-term capital gains are taxed at a maximum rate of 28% instead of the 20% used for stocks and bonds.

The GraniteShares Gold Trust (BAR) invests directly in gold held in a London vault and overseen by ICBC Standard Bank, and its price should track the spot price of the precious metal relatively closely.

Here are some key facts about the GraniteShares Gold Trust (BAR):

The expense ratio of 0.17 percent is significantly lower than the 0.60 percent threshold set by Bankrate's selection criteria.

Investing in Morningstar Gold Rated ETFs requires some careful consideration. Fees and trading costs are key differentiators among these ETFs.

To start, determine your financial goals. What are you trying to achieve with your investments? This will drive your decision-making. For example, someone saving for a second home will have a different strategy than someone saving for their child's college education.

Research gold funds by looking at performance, expense ratios, top holdings, and assets under management. You can find this information in a fund's prospectus. It's essential to stay informed and make informed decisions.

Outline your asset mix by taking an inventory of all your assets and calibrating your portfolio accordingly. Diversification is key to minimizing risk.

By periodically reviewing your investments, you can take charge of your finances and make any necessary adjustments. Remember, there's no such thing as a hands-off investment.

Assessing Gold ETFs can be a daunting task, but understanding the key criteria can make it more manageable. Bankrate selected its top funds based on specific criteria, including U.S. funds that appear in ETF.com's screener for gold or materials ETFs.

To be considered, funds must have assets under management of at least $800 million. This significant asset base indicates a fund's popularity and stability.

Expense ratios under 0.60 percent are also a key factor in Bankrate's selection process. This means that the fund's fees are relatively low, which can help investors save money.

For example, the SPDR Gold Shares GLD fund has been a pioneer in the gold ETF landscape, launched in November 2004 with $1.5 billion in assets.

Today, gold ETFs have assets under management of $100 billion as of April 2023. This growth demonstrates the increasing popularity of gold ETFs among investors.

Here are some top gold ETFs based on Bankrate's criteria:

Note that the performance data mentioned in this article is as of Dec. 13, 2024.

Trading costs can be a significant factor in your investment returns, especially if you're an active trader. Fees are one thing, but trading costs can add up quickly, especially for daily traders.

For buy-and-hold investors, trading costs are less of a concern, as they tend to trade infrequently. In fact, for the market makers and proprietary trading firms trading millions of dollars worth of gold ETFs each day, trading costs add up quickly.

GLD reigns supreme when it comes to limiting trading costs, with an average daily average bid-ask spread to its price ratio of 0.0065%, making the price of crossing the bid-ask spread virtually nothing. IAUM, on the other hand, clocked in with the highest spread/price ratio of 0.05%, or about 8 times higher than GLD.

In theory, fair value exists somewhere in the middle of a given bid-ask spread, but investors can expect to pay a premium to cross the spread. For IAUM, this premium would be 0.025%, which is a significant cost for daily traders.

Paying more on trading costs for lower-cost ETFs is worthwhile for buy-and-hold investors, given the annual fee advantage.

The SPDR Gold Shares GLD was the first exchange-traded fund on the market, and it still benefits from this advantage today. It held $1.5 billion in assets at the end of its first month in November 2004.

Low-cost gold ETFs like GLDM and IAUM are beneficial for most investors. These funds have grown significantly in assets under management, reaching $100 billion as of April 2023.

Investors trading substantial volumes may need to consider the liquidity benefits of ETFs like GLD and IAU, which may offer advantages for traders.

To find the top-performing large-value funds, we need to start with a solid screening process. We looked at open-ended and exchange-traded funds in the top 33% of the category.

We used the lowest-cost primary share classes for the last one-, three-, and five-year periods. This helps us understand which funds have consistently performed well over time.

Funds with a Morningstar Medalist Rating of Bronze, Silver, or Gold were also included in our selection. This rating system provides a level of assurance that the funds are well-managed and have a strong track record.

Funds with assets under $100 million were excluded from our analysis. This is because smaller funds can be more volatile and may not have the same level of stability as larger funds.

We also required 100% analyst coverage for the funds we selected. This ensures that the funds have a thorough evaluation and are not overlooked.

Gold ETFs have come a long way since SPDR Gold Shares GLD was launched in 2004, holding $1.5 billion in assets just one month after its inception.

The first gold ETF still benefits from its early mover advantage, with assets under management growing to $100 billion as of April 2023.

Investors have been drawn to gold ETFs during times of market volatility, such as the global financial crisis in 2008 and the coronavirus pandemic in 2020.

These flows into gold ETFs can dictate price moves, as gold is a speculative asset that produces no income of its own.

Low-cost gold ETFs like GLDM and IAUM have been a boon for most investors, offering a convenient and cost-effective way to access gold exposure.

However, traders and those trading substantial volumes may need to consider the liquidity benefits of ETFs like GLD and IAU.

Active thematic funds have a higher management fee, but still offer a competitive edge over passive funds in terms of adaptability. They can adjust their strategies to stay ahead of the curve.

The average total return for open-ended active thematic funds is not mentioned in the article, but their passive counterparts in Europe have outperformed them in the past 12 months, with an average total return of 12.08%.