AAAU vs. SGDM: Direct Gold Exposure or Gold Mining Companies?
Key Points
AAAU offers a lower expense ratio and much larger assets under management, but has minimal portfolio diversity.
SGDM holds over 43 companies and has delivered an over 2x one-year return compared to AAAU.
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It can be difficult to purchase physical gold bars, as people may lack the space to store the precious metal safely, and may not even know where to buy it in person. But there are two ETFs that can offer investors ways to invest in gold indirectly, without needing to hold it physically: the Sprott Gold Miners ETF (NYSEMKT:SGDM) and Goldman Sachs Physical Gold ETF (NYSEMKT:AAAU).
Snapshot (cost & size)
| Metric | SGDM | AAAU |
|---|---|---|
| Issuer | Sprott | Goldman |
| Expense ratio | 0.50% | 0.18% |
| 1-yr return (as of Feb. 14, 2026) | 149.88% | 73.1% |
| Beta | 0.53 | 0.13 |
| AUM | $823.1 million | $3.11 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
AAAU stands out as the more affordable option with a 0.18% expense ratio that’s less than half of SGDM's. However, SGDM has more than doubled AAAU’s one-year return.
Performance & risk comparison
| Metric | SGDM | AAAU |
|---|---|---|
| Max drawdown (5 y) | (45.05%) | (20.94%) |
| Growth of $1,000 over 5 years | $2,667 | $2,681 |
What's inside
Launched seven years ago, AAAU is designed to track the performance of physical gold, offering investors direct gold exposure by allocating 100% of its holdings in gold bars held in the U.K.
SGDM, in contrast, invests in 43 stocks within the global gold mining industry. The largest positions include Agnico Eagle Mines Ltd. (TSX:AEM.TO), Newmont Corp. (NYSE:NEM), and Wheaton Precious Metals Corp. (TSX:WPM.TO).
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
In 2025, the precious metals market skyrocketed, with many metals often following Gold's price movements. Gold, along with other metals, is seen as a hedge against the U.S. dollar, especially during periods of geopolitical and economic turbulence.
With international tariffs and heightened tensions throughout 2025 and this year, demand and prices for metals have risen significantly. Since the start of 2025 up until Feb. 14, 2026, the price of gold per ounce has nearly doubled.
This doesn’t mean that investing in gold doesn’t come with risk. Precious metals can move much more volatile than the stock market at times. And even though SGDM doesn’t hold gold directly, the companies it holds rely on it to increase in value.
Another risk to note is that SGDM holds many foreign companies, which may lead to greater price volatility than in American stocks. So investors based in the U.S. may want to be cognizant of that. Regardless, if investors are willing to take on the risk, both of these ETFs offer great ways to invest in gold.
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Adé Hennis has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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