7 Best Gold ETFs to Hedge Volatility in 2022 | Investment News
These ETFs are mostly simple and inexpensive ways to hedge with gold.
Gold exchange-traded funds have done quite well recently, with the price of their benchmark precious metal soaring almost 13% in the past 12 months. Stocks of companies can enhance short-term portfolio returns, but successful long-term investing relies on diversification across different asset classes. Investors have always used gold as a hedge against market volatility, and with the Russian-Ukrainian war raging and inflation high, now may be as good a time as any to follow in their footsteps. . These seven gold ETFs play on the precious metal in different ways, providing a hedge against volatility and uncertainty in a simple and cost-effective investment vehicle.
SPDR Gold Stock (ticker: GLD)
SPDR Gold Shares is the benchmark for investors looking to play precious metals profitably. GLD is the largest physically backed gold ETF in the world, with over $67 billion in assets under management. Since its launch in 2004, the fund has allowed investors to buy gold through their brokerage account or their individual retirement account. The fund is pegged to gold bullion, giving investors an easy way to gain exposure to gold prices without owning the physical metal. The annual expense ratio of 0.4%, or $40 for every $10,000 invested, is particularly profitable when considering the cost of shipping, insuring and storing gold bullion or coins in a safe.
iShares Gold Trust (IAU)
Similar to GLD, iShares Gold Trust offers direct exposure to the daily movement of gold bullion price. It’s smaller, at $32 billion in total assets, and it’s a bit younger, with an inception date of 2005, but it’s very close to a mirror image of the SPDR fund. An advantage of the IAU however is a lower cost, at only 0.25% of the annual expenditure. This saves investors around $15 per year on every $10,000 invested. IAU has a 10-year average annual return of 1.49%, which is slightly higher than its competitor GLD, with an average return of 1.34% over the same period.
SPDR Gold MiniShares (GLDM)
In 2018, State Street launched GLDM as an alternative to GLD. The main difference between the two is that GLDM holds less gold than GLD. GLDM also has a lower spend rate: 0.18%, compared to 0.4% for GLD. The MiniShares offering is smaller and costs less, which may be more appealing to the retail investor looking for an affordable way to gain exposure to gold in their portfolio. Similar to GLD and IAU, GLDM is designed to reflect the price performance of gold bullion, minus expenses, and has moved in step with other gold ETFs since entering the market.
Aberdeen Standard Physical Gold Shares ETF (SGOL)
Aberdeen Standard Physical Gold Shares is issued by Aberdeen Standard Gold ETF Trust. Similar to other physical gold-backed ETFs, SGOL reflects the price performance of gold bullion minus expenses. SGOL has an affordable spend rate of 0.17%. This Aberdeen fund is slightly younger than its counterparts, launched in 2009, and is also smaller, with around $2.7 billion in assets. Changes to the SGOL fund are easily reflected on the fund’s website, in order to give investors transparent information on the composition of the fund. The gold is held in bullion in vaults around the world, including Zurich and London. A list of bars is published daily on the Aberdeen website for the reference of investors.
GraniteShares Gold Trust (BAR)
GraniteShares launched BAR to offer cautious precious metals investors an ETF that both holds physical gold bullion and is mandated to perform physical audits of its vault twice a year, ensuring that it has the appropriate amount of precious metals. Its aim is to follow the performance of gold more faithfully. With an expense ratio of just 0.17%, BAR is also one of the most affordable ETFs on the market.
ETF Global X Gold Explorers (GOEX)
As its name suggests, the Global X Gold Explorers ETF offers gold investors access to companies involved in gold exploration. GOEX’s 49 holdings include gold and silver producer Hecla Mining Co. (HL) and Merdeka, a copper and gold miner that prides itself on sustainability and community development. SSR Mining, a producer of gold, silver, tin and zinc, is also among the fund’s top holdings. The fund holds $55 million in assets and has an expense ratio of 0.65%. Unlike the other gold ETFs on the list, GOEX allocates 2% of its portfolio to the information technology sector and invests in companies spread across the globe, giving the fund some built-in diversification. The majority of its gold mining operations are in Canada, but other countries include Australia, Britain, Indonesia, China and South Africa.
ProShares Ultra Gold (UGL)
ProShares Ultra Gold invests in futures contracts and takes a leveraged position in gold. A leveraged ETF is an investment vehicle that uses debt to increase returns for shareholders, as opposed to a conventional ETF, which tracks an underlying index or commodity. A fund for gold investors seeking exceptional returns, UGL aims to double the return of its benchmark, the Bloomberg Gold Subindex, in any given day. This leveraged ETF also has a daily reset feature, which adds more risk and forces investors to monitor their holdings daily. UGL may be better suited as a trading tool rather than a long-term gold ETF investment.
Prepare for market volatility with these seven gold ETFs:
- SPDR Gold Stock (GLD)
- iShares Gold Trust (IAU)
- SPDR Gold MiniShares (GLDM)
- Aberdeen Standard Physical Gold Shares ETF (SGOL)
- GraniteShares Gold Trust (BAR)
- ETF Global X Gold Explorers (GOEX)
- ProShares Ultra Gold (UGL)
Update to March 15, 2022: This story was published at an earlier date and has been updated with new information.