Investor Cheat Sheet For Gold Products
Gold ETF and ETN products offer investors convenient access to gold. These products have been immensely popular and hold close to $100 billion in assets. Along with this popularity has come the launch of a variety of products that use different structures - ETFs and ETNs - and target different types of gold assets - bullion and stocks. There are now over 20 different choices for investors to decide from.
As a way to sort through the product set, here is the latest gold product list as of mid June 2012 sorted by the amount of assets contained in the product. (high to low) Here are several takeaways:
- Bullion, or physical gold, products are the most popular.
- In this product set, ETFs are more popular than ETNs.
- Gold miner ETFs are the most owned stock niche.
- The largest gold ETF has more assets than all others combined.
While the size of a gold ETF is only one metric to consider when selecting a gold ETF, it can have an impact on returns. Other variables to consider include the expense ratio, performance and individual investment goals.
There are considerable differences in the expense ratios found across the gold ETF and ETN spectrum. Some products charge as much as .95bps while the low cost leader charges .25bps or one quarter of one percent. What you pay is not always an indication of what you will get, so reviewing the performance numbers of the gold products is the best way to determine merit of a particular product. These numbers are provided after fees and expenses and can be found on product websites or third party resources like Index Universe. Net performance numbers allow investors to compare products on an equal footing. Thus the two questions to ask are what is the net return of the particular gold product and how does it compare to its peers? These answers will help to make choices more clear.
Finally it is important to note the particular investment goal one is seeking before selecting a gold ETF. If it is income, then consider only gold stock ETFs which have the potential to pay dividends. If it is lower volatility, consider physical gold products as they have been less volatile than stock focused products. Understanding the area which the investment will fit into a portfolio allocation will be a worthwhile exercise.
Below you will find a list of gold ETF and ETN products listed in the United States. Use it as a convenient start to your investment journey.
Gold ETF & ETN Cheat Sheet