Generated July 2026 from current fund data.
Overview
GLD and IAU are both physically backed gold ETFs that track the spot price of gold bullion, offering direct commodity exposure without counterparty risk. The key difference is cost: IAU charges 0.25% annually while GLD charges 0.40%, a meaningful gap on a buy-and-hold position in an asset that generates no income.
How they differ
The single biggest difference is the expense ratio—IAU costs 15 basis points less per year (0.25% vs. 0.40%), which compounds meaningfully over time on a non-yielding asset. Both track gold bullion at near-identical beta (0.16), so performance tracking is equivalent before fees. GLD is substantially larger at $136B in AUM versus IAU's $63.8B, which means tighter bid-ask spreads and deeper liquidity on GLD, though IAU's $63.8B is still ample for most retail and institutional investors. GLD began trading in late 2004, roughly a month before IAU, giving GLD a marginally longer track record, but both have operated across multiple market cycles.
Who each is best for
GLD: Fits investors prioritizing maximum liquidity and minimal trading friction—those making frequent large purchases or sales, or requiring the tightest bid-ask spreads available in the gold-ETF universe.
IAU: Fits investors with a longer holding horizon who value cost efficiency and are willing to accept slightly deeper bid-ask spreads in exchange for lower ongoing drag on returns.
Key risks to know
- Expense drag on a zero-yield asset. Over a 20-year holding period, the 0.15% annual cost difference between these funds translates to roughly 3% of principal assuming gold returns only its inflation rate (roughly 2–3% annually). On a non-dividend-paying commodity, that drag compounds without offsetting income.
- Gold price volatility. Both funds exhibit sharp intra-year swings; while beta is low (0.16) relative to equities, absolute price moves of 10–15% in a year are common, meaning these are not capital-preservation vehicles.
- Structural equivalence masks real cost differences. Both hold physical gold in allocated vaults and have identical tracking mechanics, which can lead investors to treat them as interchangeable—they are not, because fees alone will cause IAU to outperform GLD by approximately 15 basis points annually in a flat gold market.
- Liquidity mismatch risk. GLD's $136B in AUM creates an institutional moat; in periods of broad commodity outflows or market stress, IAU's smaller float may experience wider spreads or slower execution on very large orders.
Bottom line
If you trade gold frequently or in large size and value execution certainty above all else, GLD's superior liquidity is worth the cost premium. If you plan to hold for years and want to minimize the drag of expenses on a non-income-producing asset, IAU's lower fee ratio compounds to a meaningful advantage over time. Past performance doesn't predict future results.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
