Generated April 2026 from current fund data.
Overview
GLD and IAU are both physically backed gold ETFs that track the spot price of gold bullion, holding actual gold bars in vaults rather than futures or mining stocks. The key difference is cost: IAU charges 0.25% annually while GLD charges 0.40%, a meaningful gap on a buy-and-hold position. GLD is roughly twice the size of IAU by assets under management.
How they differ
Both funds track identical underlying exposure—physical gold bars—but IAU's lower expense ratio is the primary distinction. At GLD's $155 billion AUM versus IAU's $71 billion, GLD has liquidity and tighter bid-ask spreads, though both are highly liquid. The 15 basis point difference in fees compounds over time; on a $100,000 position held five years, that gap adds up to roughly $750 in cumulative cost differential, assuming flat gold prices. Neither fund pays distributions, so there's no yield to weigh. Both have near-identical price correlation to spot gold (beta 0.19) and similar 52-week ranges.
Who each is best for
- GLD: Investors prioritizing maximum liquidity and tightest spreads, or those trading frequently enough that the slightly higher fee matters less than execution quality. Works well in taxable or tax-advantaged accounts.
- IAU: Buy-and-hold investors in any account type who want to minimize drag from fees over multi-year or multi-decade holding periods. The lower expense ratio adds value the longer you hold.
Key risks to know
- Counterparty risk. Both funds depend on vault custodians (Brinks, Loomis) to safeguard physical gold. Operational or security failures, though rare, would directly impair NAV.
- Spot price volatility. Gold prices swung $218 (75% of GLD's current price) in the past 52 weeks. These funds amplify that volatility equally; they're not hedges against equity drawdowns in all market regimes.
- Currency exposure. Gold is priced in dollars; USD strength depresses returns for international investors, and vice versa.
- Fee drag in low-return environments. If gold appreciation averages 3–4% annually over the next decade, the 15 basis point fee gap meaningfully erodes relative returns.
Bottom line
If you value lowest total cost and hold for years, IAU's 15 basis point fee advantage justifies the choice. If you trade frequently or demand maximum liquidity, GLD's larger size and tighter spreads may offset the higher cost. Both are simple, transparent ways to own gold bullion without dealing with physical storage—the real distinction is whether you prioritize cost or liquidity. Past gold returns don't predict future performance.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
