Top Gold Investment Funds 2022

Gold is popular among investors looking to hedge against stock market tumult. As gold prices rise, investors may be interested in gold exchange-traded funds rather than purchasing bullion itself.

Gold ETFs are exchange-traded funds that give investors exposure to the gold price in UAE without having to directly purchase, store and resell the precious metal. Some gold ETFs directly track the price of gold, while others invest in companies in the gold-mining industry.

As with other types of ETFs, the issuing company buys stock in gold-related companies or purchases and stores gold bullion itself. Investors buy shares in the fund, whose value rises and falls with the underlying gold price or company stock value.

Gold is considered a safe-haven investment, as its price often rises as stock markets tumble. Gold hit its all-time high of nearly $2,100 per ounce in August 2020. In recent months, the price of gold has been flirting with that record amid Ukraine escalation and inflation fears.

Investors can gain indirect exposure to the price of gold with a gold investment fund (ETF).

Some of the best performing gold ETFs, as measured by trailing 1-year returns through April 31, 2022, include GLD, IAU, and GLDM.

1. SPDR Gold Shares (GLD)
The largest and most liquid gold ETF is the SPDR Gold Shares. It’s the gold standard for investors seeking direct exposure to the price of yellow metal. The ETF’s sole assets are gold bullion, which it stores in secured vaults.

Investors pay a premium for this gold ETF. It has a higher expense ratio compared to other ETFs that own physical gold bullion. However, it’s still relatively cheaper than the cost of shipping, insuring, and storing gold bars and coins, especially when factoring in its liquidity. Its enormous size makes it a favorite of institutional investors such as pension funds that use it to hedge against inflation and other risk factors.

2. iShares Gold Trust (IAU)
The iShares Gold Trust is almost identical to the SPDR Gold Shares. That makes it another way to invest directly in gold. It also boasts a lower expense ratio than its larger rival.

Owning shares in this ETF is a great proxy for owning physical gold without the hassle and expense of storing or insuring bars and coins. The ETF handles these items, storing its bullion in the London branch of JPMorgan Chase (NYSE: JPM). Overall, this gold ETF has done an excellent job of tracking the price of gold, with only a minor underperformance due to its expense ratio.

3. SPDR Gold MiniShares Trust (GLDM)

The SPDR Gold MiniShares Trust is a lower-cost product launched by the same investment managers as the SPDR Gold Shares ETF. They created this ETF for cost-conscious retail investors, so they did not lose market share to rivals such as the iShares Gold Trust. They opted to create a new ETF rather than changing their successful (and lucrative) SPDR Gold Shares product favored by institutional investors. This gold ETF offers the same direct exposure to the price of gold since it also owns gold bullion, but at a lower cost.

That makes this ETF an ideal option for investors seeking the cheapest way to invest in gold without owning it directly. However, given its smaller size, this ETF has less liquidity than larger gold ETFs. This factor could impact pricing during periods of market volatility. However, thanks to its lower costs, it should do the best job of mirroring the price of gold over the long term since its ultra-low expense ratio will not have much impact on returns. 

Finding the best gold ETF for your portfolio

Gold ETFs seek to replicate the price movement of gold, less expenses. Gold ETFs provide indirect exposure to the price of gold, so shareholders of gold ETFs do not take possession of the physical asset. Although the price of gold can significantly fluctuate in the short term, gold as an asset has historically offered a reliable store of value.