December watchlist: The Global X Physical Gold ETF (ASX:GOLD)

How the GOLD ETF could be used in portfolios

The ETFS GOLD ETF provides investors with access to the precious metal of gold, by seeking to achieve a return equivalent to the movements in the gold spot price, before fees and expenses.
GOLD could be used by investors to diversify a portfolio with the precious metal commodity of gold which is typically uncorrelated with other asset classes. In this way, GOLD could be used as a hedge against risk – gold has been traditionally used as a store of value and a hedge against inflation, and is often seen as a ‘safe haven’ asset.

GOLD exceeds our minimum market cap (FUM) criteria

The Global X GOLD ETF had $2541.51 million of money invested when we last pulled the monthly numbers. Given GOLD’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Commodities sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.

GOLD’s fees & costs explained

Global X charges investors a yearly management fee of 0.40% for the GOLD ETF. This means that if you invested $2,000 in GOLD for a full year, you could expect to pay management fees of around $8.00.

For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.

Bottom line

This is just a quick overview of the GOLD ETF. Before ‘testing the depth of the water with both feet’ so to speak, be sure to read the GOLD ETF’s Product Disclosure Statement (PDS), available on the Global X website, or speak to your financial adviser. For another handy resource, take a look at our Global X GOLD report. You can also use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.