SPDR Gold ETF Update and Challenge (NYSEARCA:GLD)
Christian Magoon: The SPDR Gold Trust (NYSEARCA:GLD) is the world’s largest and most popular physical gold ETF. Holding close to $70 billion of investor assets makes this superstar ETF synonymous with the price of gold itself. While that association been great since GLD’s inception in 2004, gold’s recent issues have dimmed the attractiveness of the SPDR Gold Trust in 2012. Year to date the SPDR Gold Trust has gained just 40bps, less than one half of one percent. Here’s the performance and price snapshot of GLD from GoldETFs.biz.
The SPDR gold trust has been on a roller coaster ride over the last year as gold sold off late in 2011 only to see a rally to begin 2012 which has now almost evaporated. Here’s the one year performance chart of the SPDR Gold Trust from stockcharts.com.
The SPDR Gold Trust continues to compete with the upstart iShares Gold ETF (NYSEARCA:IAU). IAU has been able to gain market share in assets and volume from GLD. Here’s the most recent comparison of the two gold behemoths.
IAU has managed to steal marketshare in both areas primarily due to its lower expense ratio than the SPDR Gold Trust. At about 35% less, IAU charges 25bps versus GLD’s 40bps. In addition, the SPDR Gold Trust has been outperformed over every standard period tracked by the GoldETFs.biz performance grid.
Clearly this under performance of the SPDR Gold Trust is troubling and needs to be addressed going forward in order to stay competitive.
A quick review of GLD’s first to market, AUM and volume advantage shows that it is beginning to wane at a time when investors are reassessing their gold holdings. This should be an attractive time for GLD to use its massive scale to competitively price its offering, thus boosting performance and limiting IAU’s low cost allure. If not, IAU is likely to not only continue to gain ground on the SPDR Gold Trust but to increase its pace. This is one race that will be fun to watch.
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. Follow him on Twitter@ChristianMagoon. 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.”