Is Vanguard About To Release A Gold ETF To The Market?
Christian Magoon: Is a Vanguard gold ETF coming to market soon? Although no official plans have been announced or filed publicly, GoldETFs.biz is beginning to suspect Vanguard could enter the space. The gold ETF market segment would be appealing for Vanguard as it offers considerable assets, a healthy growth rate and legacy pricing that a Vanguard gold ETF could take advantage of.
The launch of a Vanguard gold ETF appears to be an easy extension of Vanguard’s approach in the ETF business to go after large buckets of existing ETF assets with newly launched low cost options. Vanguard has executed this strategy in the past in market segments like including the dividend income, emerging markets and broad based domestic ETF space. A great example is Vanguard’s MSCI Emerging Market ETF (NYSEARCA:VWO). It launched in March of 2005 and has an expense ratio of 20bps. VWO targeted the iShares MSCI Emerging Markets Index Fund (NYSEARCA:EEM) which launched in 2003 and has an expense ratio of 67bps. Both ETFs track the same index and today VWO has surpassed EEM as the largest emerging markets ETF. VWO holds around $60 billion in assets in comparison to EEM which holds around $35 billion. GET A FREE TREND ANALYSIS FOR ANY STOCK HERE!
So as gold ETF assets continue to surge – physical gold ETFs assets are currently close to $90 billion – a Vanguard gold ETF seems more likely. Here’s a list from GoldETFs.biz of the physical gold ETFs currently available in the U.S. ranked by assets.
A Vanguard gold ETF would compete with four other funds. Data Source: GoldETFs.biz ETF List
Already the iShares Gold Trust (NYSEARCA:IAU) has taken a low cost approach to compete with the world’s largest gold ETF, the SPDR Gold Trust (NYSEARCA:GLD). With an expense ratio of 25bps, IAU is over 30% less expensive than GLD. For investors with the low cost Vanguard mentality, IAU is clearly the best choice in the marketplace today. Here’s a breakdown of the funds above and their expense ratios.
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.”