What is the Best ETF For Gold?
Gold ETFs provide an easy and straightforward way to gain exposure to this precious metal without owning physical bars or coins, yet not all ETFs offer equal returns.
Selecting the ideal gold ETFs requires taking into account investment goals and risk tolerance. We examined various aspects, such as expense ratios and trading volume when compiling this list of candidates.
Gold has long been seen as an asset that offers protection during times of market instability and geopolitical tensions. While investors can purchase physical gold bullion, investing in an exchange-traded fund provides a simpler alternative that gives access to precious metal without incurring storage, insurance or handling fees. Before adding any investment vehicle to your portfolio, conduct thorough research to make sure it fits with both your financial goals and risk tolerance.
IShares Gold Trust (IAU) is one of the easiest ways for retail investors to gain exposure to precious metals, providing fractional ownership of physical gold bars stored around the world in secure vaults. Furthermore, this fund features low expenses and is easily traded on NYSE Arca – two hallmarks of quality investment products for retail investors.
VanEck Vectors Junior Gold Miners ETF (GDX) provides another means of investing in gold mining companies with its shares of smaller gold mining firms expected to increase production and provide superior returns over larger counterparts. GDX is listed on NYSE Arca with an affordable expense ratio. Whatever ETF you select, always use dollar cost averaging to reduce overall purchase and selling costs.
VanEck Vectors Junior Gold Miners ETF (GDX)
Gold ETFs offer an easy and cost-effective way to gain exposure to this precious metal. SPDR Gold Shares (GLD) provide direct exposure, while GDX and GDXJ take a diversified approach by including gold mining companies in their holdings. Due to these unique products’ characteristics and risks associated with each one, it’s essential that investors carefully consider their goals and risk tolerance prior to deciding which ETF is the right one for them.
GDX manages nearly $12 billion of assets under management and tracks the NYSE Arca Gold Miners Index. It has an expense ratio of only 0.51%, providing exposure to several large-cap miners both domestically and internationally such as Newmont Corp, Barrick Gold Corp. and Franco-Nevada Corp. It has proven highly effective during gold bull markets and could outperform should prices move higher; however it should be seen as a speculative product and be treated accordingly.
GDXJ is the second-largest gold mining ETF by total assets under management with more than $4 billion managed. Like GDX, this product tracks the NYSE Arca Gold Miners Junior Index with an expense ratio as low as 0.52% and exposure to small-cap gold mining companies both domestically and internationally – Pan American Silver Corp., Kinross Gold Corp. and Alamos Gold Inc. are some of its best holdings.
The SPDR Gold Shares ETF (GLD) provides investors with an accessible, low-cost means to gain exposure to gold prices. Backed by physical gold bullion deposits, its performance has proven highly correlated to that of gold prices.
Investors should keep the following factors in mind when selecting an ETF:
Assets Under Management (AUM): An ETF’s AUM serves as a measure of its popularity and investor trust. Larger ETF assets also allow it to complete trades more efficiently while offering better liquidity than smaller funds.
Expense ratio: When investing in ETFs, costs can add up over time, so it’s crucial to compare expense ratios and select an ETF with lower operating expenses.
Before selecting an ETF to invest in, take time to consider both your investment goals and how gold fits within your portfolio. Some investors might use gold as a hedge against inflation or diversification strategy; others could view it as commodity play or watch for technical signals about its price movement.
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