Investors are turning to gold-based exchange-traded funds for safety amid the Russia-Ukraine conflict and resulting stock market volatility — but they're increasingly opting for cheaper offerings, CFRA says.
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While trading volumes have spiked in the SPDR Gold Trust (GLD), the largest ETF on the market backed by physical gold, several smaller, less-expensive products are also attracting assets, CFRA's senior director of ETF and mutual fund research Todd Rosenbluth told CNBC's "ETF Edge" this week.
They include:
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- SPDR Gold MiniShares Trust (GLDM), which has an expense ratio of 0.10%
- Goldman Sachs Physical Gold ETF (AAAU), which has an expense ratio of 0.18%
- iShares Gold Trust (IAU), which has an expense ratio of 0.25%
- iShares Gold Trust Micro (IAUM), which has an expense ratio of 0.15%
For comparison, GLD's expense ratio is 0.40%. The expense ratio represents how much it costs to own a given ETF — in other words, the percentage of your investment that will be deducted per year for fees.
"We've seen broad-based demand for gold ETFs. GLD has been the heavyweight, but we are seeing some of the more moderately sized and cheaper products gain ground," Rosenbluth said in the Monday interview.
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"They're more for the buy-and-hold as opposed to the trading audience that's going to benefit from the liquidity that GLD has," he said.
Still, GLD remains an important tool, particularly for those looking to make larger traders, State Street Global Advisors' Matthew Bartolini said in the same interview.
"What we've seen ... speaks to that credibility of GLD," which has been trading since 2004, said Bartolini, head of State Street's SPDR Americas research.
"GLD is, no pun intended, the gold standard in terms of allocations with respect to gold in the ETF market," he said. "I think it's going to continue to be heavily utilized by a multitude of investors, whether you're short-term tactical because of that liquidity profile or long term just given this heritage in the space."
Gold prices hit highs not seen since September 2020 this week.
