performance and expense ratios of all physical gold ETFs listed in the United States.
As a second mover ETF, IAU has positioned itself with the lowest expense ratio of the physical gold ETF peer group. This tactic been rewarded by the marketplace through disproportionate inflows into IAU. Despite GLD’s AUM advantage of nearly 8 to 1, IAU has managed to capture 77% of the size of GLD inflows over the last 12 months. Here’s the one year inflow numbers for IAU and GLD from Index Universe’s Fund Flow Tool.
In addition to recent inflows, a five year performance comparison shows IAU with a slight advantage over GLD, even though its lower expense ratio was just introduced in 2010. Here’s the graphic from stockcharts.com showing IAU is also the best gold ETF in terms of five year performance.
Fans of GLD will point to its higher per share price and larger trading volume as more favorable than IAU. One wonders however, if the inflow trend will cause GLD to use its massive scale to implement a more competitive expense ratio or if it will continue to cede traction to IAU.
For investors, both IAU and GLD continue to provide convenient and efficient access to the performance of physical gold. Further price competition will only increase the attractiveness of owning gold through the ETF structure and one wonders how low (expense ratio) and how high (AUM) gold ETFs will reach in the coming years. May the best gold ETF win.
Christian Magoon is Publisher of GoldETFs.biz and IndiaETFs.com. He is also CEO of Magoon Capital, a strategic consultant firm to asset managers. Christian Magoon is an ETF insider, having launched over 40 ETFs in the United States to date. A widely recognized thought leader on finance and market issues, Christian regularly contributes to many financial media outlets. Prior to forming Magoon Capital in 2010, Christian was President of Claymore Securities (now Guggenheim Investments), where he built one of the fastest growing and most innovative ETF businesses in the country, gathering more than $3 billion in AUM in three years. He launched more than 40 ETFs, introducing many “firsts” to the U.S. market, including the first Frontier Markets, Sector Rotation, Solar Energy, Timber, BRIC and suite of China focused ETFs. Christian consistently provides his industry insights and knowledge as a commentator in the U.S. media speaking publicly on macro investment issues and ETF related topics. In 2008, he was named by Institutional Investor News as one of the five people to watch in the U.S. ETF marketplace. In 2011, Financial Planning magazine dubbed Christian an “ETF Pioneer.”