Gold is popular among investors looking to protect themselves against stock market turmoil. As gold prices rise, investors may become interested in gold exchange-traded funds rather than purchasing the bullion itself.
The best performing gold ETFs
Below is our complete list of the best-performing gold ETFs. We exclude gold exchange-traded notes and leveraged gold ETFs.
Quarterly Buffered ETF FT Vest Gold Strategy
iShares Gold Trust Micro ETF Benef Interest
Goldman Sachs Physical Gold ETF
Source: VettaFi. The data is up to date market closes on January 31, 2024 and is for informational purposes only.
What are gold ETFs?
Gold ETFs are exchange traded funds which give investors exposure to gold without having to directly buy, store and resell the precious metal. Some gold ETFs directly track the price of gold, while others invest in companies in the gold mining sector.
As with other types of ETFs, the issuing company buys shares of gold-related companies or buys and stores gold bars itself. Investors buy shares of the fund, which rise and fall in value depending on the price of the underlying gold or the value of the company’s stock.
Gold is considered a safe haven, because its price often rises as stock markets fall. Gold reached its all-time high of nearly $1,900 an ounce in September 2011, in the wake of the Great Recession. In recent months, the price of gold has been flirting with this record.
How to Invest in Gold ETFs
Here’s how to buy shares in a gold ETF:
Step 1: Find a Gold ETF
Step 2: Analyze the ETF
Two things to check before buying shares in a gold ETF:
Returns over five years. Most (but not all) gold ETFs are indexed to the spot price of gold, so returns should align with gold price movements.
Expense rate. This is the ETF’s annual fee, paid from your investment in the fund. The average expense ratio for gold ETFs is 0.65%, according to ETF.com. Look for a low one.
And two important caveats: The average investor should avoid buying leveraged gold ETFs – these use financial derivatives and borrowed money to bet on future price movements. Also avoid gold exchange-traded notes. ETNs are collateralized debt securities that do not actually own the underlying gold (unlike ETFs) and carry a higher risk of credit default.
These investments are for professionals only and are not suitable for a buy-and-hold strategy favored by many investors saving for retirement.
Step 3: Buy the Gold ETF
You can buy ETFs like you would buy a stock, through an online broker. A good approach is to buy them regularly to take advantage of spread of costs in dollars.
Learn more about sector ETFs:
Track your finances in one place.
Find ways to save more by tracking your income and net worth on NerdWallet.
Neither the author nor the publisher had any ownership interest in the above investments at the time of publication.