Gold is a popular asset among investors wishing to hedge against risks such as inflation, market turbulence, and political unrest. Aside from buying gold bullion directly, another way to gain exposure to gold is by investing in exchange-traded funds (ETFs) that hold gold as their underlying asset. Some investors view ETFs as a relatively liquid and low-cost option for investing in gold compared to alternatives such as gold futures contracts or shares of gold mining companies. Still, the price of gold can see big swings, meaning ETFs that track it can also be volatile.

Key Takeaways

  • The gold sector has significantly outperformed the broader market over the past year.
  • The gold ETFs with the best 1-year trailing total return are GLDM, BAR, and IAU.
  • The single holding of each of these ETFs is gold bullion.

There are 8 ETFs that trade in the U.S. that are focused on tracking the price of gold, excluding leveraged or inverse funds as well as those with under $50 million in assets under management (AUM). The price of gold futures increased 25.5% in the past year, significantly exceeding the 14.0% 1-year total return of the S&P 500.  The best performing gold ETF is the SPDR Gold MiniShares Trust (GLDM). Below, we’ll look at the top 3 gold ETFs as measured by 1-year trailing total returns. Performance figures above are as of November 4; all other numbers are as of November 8, 2020.

SPDR Gold MiniShares Trust (GLDM)

  • 1-Year Trailing Total Return: 32.9%
  • Expense Ratio: 0.18%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 2,418,068
  • Assets Under Management: $3.7 billion
  • Inception Date: June 25, 2018
  • Issuer: State Street SPDR

The objective of the SPDR Gold MiniShares Trust is to track the spot price of gold, less its expenses. The fund is structured as a grantor trust, meaning that the investors in the fund are the direct owners of its underlying assets, which in this case is gold bullion. Being structured as a grantor trust also means that any taxes owed by the fund are "passed through" to the fund's investors and paid as part of the investors' individual tax returns. The fund’s sponsor, State Street SPDR, publishes a weekly update of the total amount of gold bullion which it holds. As of November 8, its most recent weekly figure was roughly 1,968,040.1 ounces. 

GraniteShares Gold Trust (BAR)

  • 1-Year Trailing Total Return: 32.8%
  • Expense Ratio: 0.17%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 448,500
  • Assets Under Management: $1.3 billion
  • Inception Date: August 31, 2017
  • Issuer: GraniteShares

Like GLDM above, BAR is structured as a grantor trust, with investors in the fund as direct owners of the underlying asset. Similarly to GLDM, that asset is gold bullion that is stored in a vault in London. BAR's expense ratio of 0.17% makes it among the least expensive gold ETFs available. The fund seeks to track the spot price of gold less its expenses and publishes a daily list of its gold bar holdings; as of November 8, its most recent weekly figure was roughly 614,863.4 ounces. The single holding of BAR is gold bullion. 

iShares Gold Trust (IAU)

  • 1-Year Trailing Total Return: 32.6%
  • Expense Ratio: 0.25%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 24,170,860
  • Assets Under Management: $32.4 billion
  • Inception Date: January 28, 2005
  • Issuer: iShares

Like the other two funds on our list, the iShares Gold Trust is a grantor trust that provides investors with direct ownership of the underlying gold bullion held in a vault. IAU seeks to track the price of gold, less expenses. As of November 6, the trust held roughly 17,055,468.9 ounces. As with GLDM and BAR, the top and only holding of IAU is gold bullion.