ETF Talk: Labor Not for This Golden ETF

ETF Talk: Labor Not for This Golden ETF

If, like me, you enjoy the classics (by which I mean the study of ancient Greece and Rome), then you may be familiar with the eleventh labor given to Hercules by Eurystheus: to steal the golden apples from the gardens of the Hesperides, daughters of the mighty titan Atlas and nymphs of the evening and the golden light of sunset.

To accomplish this labor, Hercules had to adventure far and wide, eventually taking the literal weight of the world from Atlas onto his shoulders to get the golden apples.

While gold is still as valuable today as it was in antiquity, thankfully, we don’t have to work as hard as Hercules to get it. Instead of stealing into the gardens of the Hesperides for our gold, we can invest in it by way of the market.

As you likely already know, the price of gold has been pushing upward since March of this year. Between investors readying for Fed rate cuts in September, central bank buying to hedge against uncertainty and rising geopolitical tensions, the yellow metal continues to entice with promises of stability in this period of plural uncertainty.

And in the market that is our garden, there is more than one tree from which to pluck golden apples for your basket. One of my favorites is this exchange-traded fund (ETF): abrdn Physical Gold Shares ETF (SGOL).

SGOL is a physically backed gold trust that aims to reflect the performance price of gold bullion. The fund provides investors with an efficient and low-cost way of investing in gold without enduring the Herculean (and expensive) task of buying the yellow metal itself. So, while not exactly the equivalent of gold, SGOL gives investors an alternative that allows a level of participation in the gold market via the securities market.

Notably, the fund is set up as a grantor trust, as it holds physical gold, which means that shareholders are treated as fractional owners and, therefore, taxed directly. This legal structure of the grantor trust also affords transparency regarding the physical asset: you can find a list of SGOL’s gold bars on its website.

The fund has good liquidity with daily trading volume around three-and-a-half million shares. It has net assets of around $3.33 billion and a miniscule expense ratio of 0.17%. It is up 4.08% over the last month, up 5.13% over the last three months and up 16.62% for the year to date.

As the chart above shows, the fund has been climbing since late last year and now trades near its 52-week high of $24.18.

The price of gold is expected to go up in the latter part of the year as central banks continue to buy, stoked in part by geopolitical tensions, and continued economic concerns in the United States, including a weaker dollar and job market.

Needless to say, you don’t have to be Hercules to obtain a golden apple of your own — SGOL provides the perfect solution for adding that heavy bit of shine to your portfolio. Be aware, however, that all that glitters is not gold. Investors should always do their due diligence before adding any stock, fund or ETF to their portfolio.

As always, I’m happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.