Top 5 Gold ETFs to Consider Investing in

August 15, 2022
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As the price of gold, the fund's underlying precious metal, has risen by around 13% over the last year, the ETF has performed rather well recently. While investing in company stocks may improve short-term returns, a diversified portfolio is more likely to succeed in the long run. Now may be as good a time as any to follow in the footsteps of investors who have historically used gold as a hedge against market volatility, with the Russia-Ukraine war raging and inflation at an all-time high.

These five gold ETFs provide diversification, low costs, and protection against market volatility and uncertainty in various ways.

What is the gold ETF?

Exchange-traded funds (ETFs) that track the domestic price of actual gold are known as "Gold ETFs." Gold ETFs are index funds that invest in gold bullion depending on the price of gold. Gold exchange-traded funds (ETFs) are gold-backed paper units. The Gold ETF is backed by actual gold, and one unit equals one gram of gold. Therefore, gold-investing exchange-traded funds (ETFs) combine the ease of gold investment with the versatility of stock trading. Gold exchange-traded funds (ETFs) are traded like any other stock on India's NSE (National Stock Exchange) and BSE (Bombay Stock Exchange Ltd.).

How does the Gold ETF work?

A gram of gold is equivalent to one unit of a Gold ETF that is 99.5% pure. Units are backed by physical gold kept in the vaults of custodian banks. Imagine that the fund manager gives each unit the value of one gram of gold. One gram of gold's value is roughly equivalent to the price of one unit in this scenario. Gold exchange-traded funds (ETFs) are tradable via several investment vehicles.

How can I invest in the Gold ETF?

Many different financial institutions (both public and private) now provide gold ETF products. When you've decided on a product, your ETF fund manager will act as your stockbroker on the NSE, acquiring and selling gold on your behalf. This method is analogous to stock trading on the stock market.

Experts agree that adding a Gold ETF to your investment portfolio is the best way to protect it from potential losses. Depending on how much you're willing to take a chance and how much money you have, you may invest between 5 and 10 percent of your money in gold. Adding gold to your investment portfolio may be a wonderful strategy to diversify your holdings and protect your wealth.

Top gold ETFs to invest in

Following is our list of top five gold ETFs which are a very good investment to add to your portfolio.

SPDR Gold Mini Shares Trust (GLDM)

GLDM seeks to reflect the performance of the gold price net of fund expenses. The ETF's grantor trust structure may provide investors with favorable tax treatment. Compared to some of the other gold commodities ETFs on our recommended list, like BAR and SGOL, GLDM has a lower expense ratio. The LBMA Gold Price is the basis for GLDM's gold pricing. It provides a convenient and inexpensive way for investors to buy gold. The fund's only holding is physical gold bullion.

Granite Shares Gold Trust (BAR)

Just like GLDM, BAR will track the change in the price of gold bullion after deducting the cost of managing the fund. As a grantor trust, it provides certain tax advantages as well. Since it is listed on NYSE Arca, investors may trade the ETF with any regular brokerage account. It's a low-cost way to obtain exposure to gold's price appreciation, especially compared to other gold ETFs. Gold bullion stored in London vaults is the only holding of the fund.


Abrdn Physical Gold Shares ETF (SGOL)

Like the aforementioned mutual funds, SGOL is a grantor trust with the investment objective of replicating the performance of the gold bullion price net of fund expenses. As previously mentioned, it also offers lower costs than other gold ETFs. Gold bullion is the sole tangible asset of the fund, which is stored in secure locations in Zurich and London. SGOL's vaults are audited twice a year by Inspectorate International, a highly regarded physical commodity auditor.

iShares Gold Trust (IAU)

Like GLD, the iShares Gold Trust tracks the price of gold bullion daily. While it is somewhat younger and has fewer total assets ($32 billion), this fund is generally almost identical to the SPDR fund. The annual expenditures of maintaining IAU are decreased to approximately 0.25 percent, a significant saving over the alternatives. An annualized savings of $15 is realized for every $10,000 invested. Comparatively, GLD has returned an average of 1.34 percent over the same period, while IAU has returned an average of 1.49 percent annually over the last decade.

Global X Gold Explorers ETF (GOEX)

The Global X Gold Explorers Exchange Traded Fund (ETF) exposes investors to companies involved in gold exploration. The gold and silver producing Hecla Mining Co. (HL) and the copper and gold mining company Merdeka, which takes pride in sustainability and community development, are only two of GOEX's 49 holdings. SSR Mining is a major component of the portfolio because of its ability to mine precious metals.

The fund's expense ratio is 0.65 percent, and its total assets are $55 million. Compared to the other gold ETFs on our list, GOEX stands out since it invests in companies all over the globe and devotes 2% of its portfolio to the information technology sector. Its gold mining activities are concentrated in Canada, but the company operates in other countries, including Australia, Britain, Indonesia, China, and South Africa.

Final thoughts

Gold exchange-traded funds provide investors with a fantastic gateway into the gold market. From funds that track the price of gold in real time to funds that research the global gold mining industry, gold exchange-traded funds (ETFs) have gathered substantial assets and become desirable investment vehicles. We hope you found this article useful.

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