GLD vs. IAU: The Battle For Inflows

ETF Database

The gold ETF space has been steadily growing for the last few years, as investor interest in this precious commodity continues to surge. But while there have been plenty of new entrants and competitors, two funds remain safely atop the list: The SPDR Gold Trust (GLD, A) and COMEX Gold Trust (IAU, A). GLD, in fact, is the second largest ETF in the world, while IAU’s $10+ billion in assets keep it in the mix. 

But the real question has been the battle between these two products as iShares cut its expense ratio to 25 basis points in order to better compete with GLD’s 40 basis point fee structure. With both products tracking physical bullion at nearly identical exposure, the performance gaps are typically tight. But when it comes to inflows, there is no question as to which product takes the cake.

All asset data is in millions.

The Results

It does not take long to figure out that the inflows of GLD dwarf that of IAU. The iShares product only bested its State Street competitor in 2011 when GLD saw an outflow of $534 million compared to IAU’s inflow of over $2.7 billion. The reason for such a stark difference in fund flows? GLD is accessed by active traders and has an extremely liquid and active market; IAU is typically held by investors who plan on having the fund for an extended period of time [see also 50 Ways To Invest In Gold].

There are pros and cons to both funds because of this breakdown. GLD has the potential for bullish runs that may allow it to slightly outperform IAU. But on other hand, long term investors may see IAU’s more stable flows pattern as something of a plus and could enjoy the relatively predictable nature of the fund by comparison. Either way you spin it, the eternal battle for funds will rage on between these two juggernauts as investors continue to make their gold allocations.

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Disclosure: Long IAU.

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