Generated October 3, 2026.
Overview
GLD and IAU are both physically backed gold ETFs that track the spot price of gold bullion, holding actual metal in vaults rather than futures or mining stocks.
How they differ
The primary difference is the expense ratio. IAU's 0.25% fee undercuts GLD's 0.40% by 0.15%, a gap that compounds meaningfully over decades of buy-and-hold ownership. Both ETFs carry identical 0.45 beta and hold actual gold bullion, so their return patterns track the same underlying commodity price. The funds inception dates are separated by just over a month, with GLD launching in 11/18/2004 and IAU in 01/21/2005, so both have a long track record. Neither fund pays distributions.
Who each is best for
GLD: Fits investors who prioritize trading liquidity and don't mind paying a modestly higher fee for the largest physical gold ETF, often preferred by frequent traders and institutions making large block purchases.
Key risks to know
- Counterparty and custody risk: Both funds depend on third-party custodians to safeguard physical gold in vaults. Operational failure, theft, or legal dispute over stored metal, though rare, would directly harm fund value.
- Gold price volatility: Both ETFs move with spot gold prices, which can swing 10% or more within months. Neither fund dampens this volatility—beta of 0.45 means each dollar of gold exposure carries full commodity price risk.
- Fee drag over long holding periods: The 0.15%% annual fee difference, while modest in isolation, compounds to meaningful underperformance in a flat or slowly appreciating gold market; over 20 years of 0% real gold returns, the fee gap alone could amount to 3% or more of cumulative value lost.
- No inflation hedge in real terms: Gold's long-run real return (adjusted for inflation) has been negligible. Investors relying on gold to outpace inflation should verify their assumptions against historical data.
Bottom line
If you value the absolute lowest cost and intend to hold for years without active trading, IAU's 0.25% expense ratio and $63.4B asset base offer a straightforward advantage. If you trade frequently or require the tightest execution on large positions, GLD's size and liquidity may justify its 0.40% fee. Both track the same commodity with identical volatility, so the choice hinges on cost sensitivity and trading frequency rather than return potential. Past performance of gold prices does not predict future results.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
