Going for Gold: How IAU's Pure Play on Physical Gold Compares to SGDM's Gold Mining Focus
Key Points
SGDM has dramatically outperformed IAU over the past year, but with a higher expense ratio and more volatility.
IAU offers much larger assets under management, lower transaction costs, and a pure play on the price of gold.
SGDM holds a concentrated portfolio of gold mining companies, while IAU tracks the price of physical gold itself.
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The Sprott Gold Miners ETF (NYSEMKT:SGDM) and the iShares Gold Trust (NYSEMKT:IAU) both target gold, but they take fundamentally different approaches.
While SGDM invests in North American gold mining companies, IAU tracks the price of physical gold. Here’s how the two stack up for investors looking to add a gold-focused ETF to their portfolio.
Snapshot (cost & size)
| Metric | SGDM | IAU |
|---|---|---|
| Issuer | Sprott | iShares |
| Expense ratio | 0.50% | 0.25% |
| 1-yr return (as of April 13, 2026) | 101% | 47% |
| Beta (5Y monthly) | 0.91 | 0.19 |
| Assets under management (AUM) | $703.5 million | $70.5 billion |
| Dividend yield | 0.96% | N/A |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
IAU is more affordable, charging half the expense ratio of SGDM. However, because IAU tracks the price of physical gold rather than companies, it doesn’t pay dividends. SGDM’s 0.96% dividend yield could give it an edge for investors seeking income alongside investment growth.
Performance & risk comparison
| Metric | SGDM | IAU |
|---|---|---|
| Max drawdown (5 y) | -49.68% | -21.82% |
| Growth of $1,000 over 5 years | $3,103 | $2,714 |
What's inside
IAU provides direct exposure to gold bullion, aiming to match the price of physical gold. With over $70 billion in assets under management and more than two decades of history, this trust is among the most liquid gold vehicles available. While it does not hold stocks or bonds, it serves as a straightforward tool for tracking gold price movements.
SGDM, in contrast, invests in a concentrated basket of around 40 North American gold mining companies, with a 100% basic materials tilt. Its largest holdings include Agnico Eagle Mines, Barrick Mining, and Newmont, making it more sensitive to mining company fundamentals and equity market swings than IAU.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Both SGDM and IAU can be smart buys for those seeking exposure to the gold market, but the two funds offer different risk profiles and earning potential.
Because SGDM holds gold-mining companies, it’s more vulnerable to general market volatility and to the performance of its specific portfolio of stocks.
Based on historical data, this ETF does pose more risk than IAU. Its significantly higher beta and deeper max drawdown suggest more severe price swings, so investors should prepare for a rockier ride with SGDM.
That said, investing in gold stocks also creates more potential for higher earnings. SGDM has more than doubled IAU’s one-year performance, while also paying dividends — something IAU can’t offer as it doesn’t hold stocks.
Traditionally, most investors choose precious metals because they’re aiming to avoid the volatility of stocks. If that’s the case for you, IAU may be the stronger fit. Its direct exposure to the price of physical gold carries less risk than investing in gold mining companies, but it’s historically experienced slower growth.
SGDM is the higher-risk, higher-reward option, which won’t be the right fit for everyone. But if you’re looking for a different take on gold exposure and are comfortable with greater volatility, it could help you earn more over time.
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Katie Brockman 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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