SPDR Gold Shares vs iShares Gold Trust Fees Liquidity Compared

Choosing between iShares Gold Trust (NYSEMKT:IAU) and SPDR Gold Shares (NYSEMKT:GLD) involves weighing the lower management fees of IAU against the superior trading liquidity and institutional presence of GLD.

Both funds are designed to track the spot price of gold bullion by holding physical bars in secure vaults, providing investors with a way to own the metal without the logistical hurdles of storage and insurance. While they offer nearly identical exposure to the precious metal, their differing fee structures and trading volumes make each better suited for specific types of investors.

Snapshot (cost & size)

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. The dividend yield represents the trailing-12-month distribution yield.

The iShares Gold Trust is notably more affordable, charging an expense ratio of 0.25% compared to the 0.40% fee for SPDR Gold Shares. Neither fund provides a dividend yield because gold is a non-productive asset.

Performance & risk comparison

What's inside

SPDR Gold Shares (NYSEMKT:GLD) is the oldest and largest gold ETF in the U.S. market, having launched in 2004. Its portfolio consists of 100% basic materials, specifically physical gold bullion held in secure vaults. Because the trust holds a single physical commodity rather than a basket of stocks, its holdings count is n/a. The fund does not generate income, so its trailing-12-month dividend is n/a. This fund is frequently used by institutional traders who prioritize high volume and tight spreads, which helps mitigate the friction of its 0.40% expense ratio. Its assets under management (AUM) currently stand at ~$152.1 billion.

The iShares Gold Trust (NYSEMKT:IAU) launched in 2005 and similarly maintains a portfolio dedicated entirely to physical gold, though it is classified as 100% real estate. Like its competitor, the iShares fund has a holdings count of n/a as it tracks a single commodity. It also has a trailing-12-month dividend of n/a. While the SPDR fund has a larger presence, the iShares trust manages a substantial ~$72.9 billion in AUM. It remains a popular choice for long-term investors who want the lowest possible annual carry cost, charging just 0.25% in annual fees.

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What this means for investors

Investors often make comparisons of precious metal ETFs. However, they might struggle to find meaningful differences in SPDR Gold Shares and the iShares Gold Trust. Since both track the price of gold, they typically move together and offer similar returns.

Nonetheless, upon closer inspection, GLD has more than double the assets under management compared to IAU. This might be by virtue of being the older ETF and possibly by having a ticker that investors might intuitively tie to gold.

However, as previously mentioned, IAU offers the benefit of a lower expense ratio, just 0.25% versus 0.40% for GLD. That likely explains why IAU’s one-year returns were 0.15 percentage points higher than its peer. While that may not seem meaningful, that could add up to significantly higher returns for IAU over a long-term holding period.

Ultimately, both GLD and IAU tie investor assets to gold, meaning both funds can serve as an inflation hedge or a safe haven in a world facing economic turmoil. But given the lower expense ratio, IAU appears to hold a slight edge in terms of returns.

Will Healy has positions in SPDR Gold Shares and iShares Gold Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.