Gold ETFs GLD vs. IAU: Fee differences shaped long-term performance
IAU’s annual expense ratio is 0.25%, while GLD’s is 0.40%. IAU’s historical cumulative return was about 904%, while GLD’s was about 880%, and the fee difference affected long-term performance.
SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) are exchange-traded funds (ETFs) that track the price of gold by holding physical gold. Both products are designed to hold physical gold as their underlying asset. The purpose of these investment products is to reflect movements in the price of gold.
IAU’s annual expense ratio is 0.25%. GLD’s annual expense ratio is 0.40%. IAU has the lower expense ratio.
IAU’s historical cumulative return was about 904%. Over the same period, GLD’s cumulative return was about 880%. The two figures show the performance of long-term holdings.
The two ETFs generally performed similarly. Their operating structures are based on physical gold custody and a trust structure. Their underlying source of returns is changes in the spot price of gold.
Differences in annual fees affect cumulative returns over long holding periods. The lower-cost product showed a more cost-efficient outcome for long-term holders. The fee structure can affect performance when making an investment choice.
Sources: The Motley Fool
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