Themes Gold Miners ETF
The AUMI Gold ETF provides investors with exposure to the global gold mining industry through a market cap-weighted index comprising the 30 largest gold mining companies worldwide. This index selection process begins with screening based on market capitalization, revenue, size, and liquidity criteria to identify eligible securities. The final composition is determined by an index committee, ensuring a diversified representation of the largest firms in the industry.
AUMI not only invests directly in these companies' securities but also holds American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) based on the underlying stocks. Each constituent within the index is weighted according to its free float market capitalization, with individual holdings capped at 4.75%. The ETF employs a replication strategy, mirroring the index by investing in all underlying securities in the same proportions. Additionally, AUMI may engage in lending activities, leveraging up to one-third of its assets' value.
This ETF undergoes annual adjustments to its index composition in February and reweights its holdings annually in August. By offering a systematic approach to investing in the largest gold miners globally, AUMI provides a convenient vehicle for investors seeking broad exposure to the gold mining sector while benefiting from the liquidity and transparency of an ETF structure.
$37.66
Change: ($-0.73) -1.92%Expense Ratio: 0.35%
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Expense Ratios vs Storage Fees
In ETFs, expense ratios are the annual costs associated with managing the fund, including management fees, administrative costs, and other expenses. These fees, although seemingly minor, can accumulate over time and erode an investor's returns.
Storage fees for physical bullion are fixed costs associated with securely storing the gold. These fees provide predictability compared to the variable expense ratios of ETFs. When deciding between gold ETFs and physical bullion, investors should consider the long-term effects of these expense ratios versus the fixed storage fees to determine the most cost-effective investment strategy.
Expense Ratio for AUMI
| Years | Net Investment | ETF Fees 0.35% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $35.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $92.98 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $177.31 | $60.90 | |
| 4 | $30,000 | $291.78 | $100.29 | |
| 5 | $35,000 | $440.58 | $151.56 | |
| 6 | $40,000 | $628.37 | $216.33 | |
| 7 | $45,000 | $860.36 | $296.43 | |
| 8 | $50,000 | $1,142.31 | $393.90 | |
| 9 | $55,000 | $1,480.62 | $510.97 | |
| 10 | $60,000 | $1,882.39 | $650.14 | |
| 20 | $110,000 | $11,610.15 | $4,043.72 |
For investors evaluating the AUMI Gold ETF against OneGold, it's essential to account for the fees and overall investment impact over time. We'll assess how these costs accumulate over a twenty-year horizon, assuming an 8% annual return, which reflects gold's historical average rate of return since 1971.
Comparsion of Fees
ETF Fees: The AUMI Gold ETF has an average fee of 0.35%, which compounds to a significant total fee over 20 years. By the end of this period, the total fees paid to the ETF would be $11,610.15.
OneGold Storage Fees: On the other hand, OneGold charges a lower storage fee of 0.12% of the gold's value. After twenty years, the cumulative storage fees paid to OneGold would amount to $4,043.72, leading to a total savings of $7,566.43 compared to the AUMI Gold ETF.
Understanding ETF Risks, Taxes, and Hidden Fees
Investors should be aware of the risk of ETF closures, which can force them to liquidate their positions at unfavorable times, potentially leading to financial losses. This makes it crucial to thoroughly research the stability and management of the ETF before investing. Evaluating the fund’s track record and the expertise of its management team can help mitigate the risks associated with unexpected closures and ensure a more secure investment.
In addition to the risk of closure, investors need to consider the tax implications and hidden fees associated with ETFs. Different ETFs have varying tax treatments, which can significantly impact overall returns. Fees imposed by trading platforms for buying and selling ETFs can also accumulate over time, reducing investment capital. Being aware of these costs and incorporating them into your investment strategy is crucial for making informed decisions and maximizing returns.
Advantages of Holding Real Gold for Liquidity
Holding physical gold provides exceptional liquidity, allowing investors to quickly convert their assets into cash or other tangible items as needed. This is particularly advantageous during periods of economic uncertainty when gold tends to retain its value. Unlike some ETFs that do not provide direct ownership of the underlying gold, holding physical gold ensures immediate access and control over your assets, providing a sense of security.
Moreover, while some ETFs allow for the redemption of shares for physical gold, the process can be complex and involve stringent conditions. Investors should carefully review these terms to ensure they align with their investment goals. Choosing a transparent vaulted gold option like OneGold provides a straightforward method of accessing your gold holdings, avoiding the complexities associated with ETF redemptions. This approach can be especially appealing to those who prioritize liquidity and simplicity in their investments.