IAU vs. AAAU: Which Physical Gold ETF Is the Better Buy for Investors?
Key Points
AAAU offers a lower expense ratio of 0.18% compared to 0.25% for IAU.
IAU is much larger and more established, with more than $67 billion in assets under management.
Both funds provide identical exposure to physical gold bullion, resulting in nearly identical performance and risk profiles over the last five years.
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Investors who look to gold as a hedge against inflation or geopolitical uncertainty have several ways to gain exposure. While some investors prefer physical coins or bars, many choose exchange-traded funds for their convenience, security, and liquidity.
The iShares Gold Trust (NYSEMKT:IAU)and the Goldman Sachs Physical Gold ETF (NYSEMKT:AAAU) provide nearly identical exposure to gold bullion, and this comparison examines how these two popular gold-backed funds stack up.
Snapshot (cost & size)
| Metric | AAAU | IAU |
|---|---|---|
| Issuer | Goldman Sachs | iShares |
| Share price (as of Sept. 25, 2026) | $42.28 | $80.68 |
| Expense ratio | 0.18% | 0.25% |
| 1-yr return (as of Sept. 25, 2026) | 14.4% | 14.2% |
| Dividend yield | N/A | N/A |
| Beta (5Y monthly) | 0.45 | 0.45 |
| Assets under management (AUM) | $2.9 billion | $67.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months.
Neither fund offers a dividend, so there's no advantage for income-focused investors. However, AAAU has a slight edge in fees, with an expense ratio of 0.18% compared to IAU's 0.25%.
Performance & risk comparison
| Metric | AAAU | IAU |
|---|---|---|
| Max drawdown (5 yr) | -26.3% | -26.4% |
| Growth of $1,000 over 5 years (total return) | $2,425 | $2,415 |
What's inside
IAU tracks the daily performance of gold bullion and provides investors with a way to access the gold market without owning physical gold. The trust holds its gold in secure vaults around the world, providing a level of institutional security that is difficult for individual investors to replicate. The fund was launched in 2005 and has maintained a long track record of consistency.
AAAU operates with a similar mandate, seeking to mirror the market price of gold after accounting for operational expenses. This ETF also provides an institutional-grade storage solution, ensuring that each share is backed by a specific amount of physical metal held in custody. This fund was launched in 2018, making it somewhat less established than IAU.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
AAAU and IAU are identical in most ways that matter for investors. They both track the price of physical gold, offering investors a simpler and more straightforward way to gain exposure to precious metals.
Because their structures are essentially the same, both funds have experienced nearly identical returns and max drawdowns, suggesting similar levels of price volatility over the last five years.
The two differentiating factors are fees and assets under management (AUM). IAU offers a significantly larger AUM of $67 billion compared to roughly $3 billion for AAAU.
A larger AUM can make it easier for investors to buy or sell large amounts without affecting the ETF's price, and while both of these AUMs are large enough to accommodate most retail investors, it's a factor to consider when these funds are so similar in so many other ways.
One other factor that could influence your decision is the expense ratio. AAAU charges an expense ratio of 0.18%, meaning you'll pay $18 per year in fees for every $10,000 invested. IAU charges a slightly higher fee of 0.25%, or $25 per year for every $10,000.
On the surface, this may not seem like much. But for long-term investors with large account balances, it could amount to hundreds or even thousands of dollars per year.
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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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