Franklin Responsibly Sourced Gold ETF
The FGDL Gold ETF provides investors with exposure to the price movements of gold, deducting expenses and liabilities, through holdings of physical gold bars that conform to the London Bullion Market Association's (LBMA) responsible gold sourcing guidelines. Each share of FGDL represents 1/100th of the spot price of gold, offering a convenient and cost-effective method for investors to hold physical gold. The gold bars are securely stored at JPMorgan Chase Bank's London branch, ensuring both security and compliance with rigorous ethical standards in the gold supply chain.
FGDL distinguishes itself by integrating Environmental, Social, and Governance (ESG) principles into its investment approach. The LBMA's responsible sourcing program mandates that refiners must demonstrate efforts to protect the global environment, combat money laundering, terrorist financing, and uphold human rights. Only gold refined after January 1, 2012, meeting these ethical criteria, is eligible for inclusion in the fund, safeguarding the integrity of the gold supply chain. Investors should be aware that any realized gains from FGDL shares are taxed as collectibles. Previously known as FGLD, the ETF underwent a ticker change on May 19, 2023, from FGDL following a legal resolution with the World Gold Council. This ESG-focused strategy positions FGDL uniquely for investors seeking financial returns aligned with ethical considerations in gold investments.
$36.47
Change: ($-0.19) -0.52%Expense Ratio: 0.15%
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Expense Ratios vs Storage Fees
Expense ratios in gold ETFs represent the annual fees for managing and operating the fund. These costs, although small, can accumulate and reduce your overall returns, particularly in the long term.
Physical bullion requires storage fees, which are charges for keeping your gold safe in a secure location. These fees are usually fixed and provide a predictable expense structure. By comparing the fixed storage fees with the expense ratios of ETFs, you can better assess which investment option aligns with your financial strategy.
Expense Ratio for FGDL
| Years | Net Investment | ETF Fees 0.15% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $15.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $39.88 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $76.10 | $60.90 | |
| 4 | $30,000 | $125.32 | $100.29 | |
| 5 | $35,000 | $189.36 | $151.56 | |
| 6 | $40,000 | $270.27 | $216.33 | |
| 7 | $45,000 | $370.31 | $296.43 | |
| 8 | $50,000 | $492.00 | $393.90 | |
| 9 | $55,000 | $638.16 | $510.97 | |
| 10 | $60,000 | $811.90 | $650.14 | |
| 20 | $110,000 | $5,044.26 | $4,043.72 |
When evaluating the FGDL Gold ETF against OneGold, it's necessary to take into account the fees and overall investment growth over time. This analysis will explore the financial impact over a span of twenty years, assuming a consistent 8% annual return, reflective of gold’s historical average rate of return.
Comparsion of Fees
ETF Fees: The FGDL Gold ETF has an average expense ratio of 0.15%, leading to a considerable accumulation of fees over the years. Over a twenty-year period, this results in a total fee expenditure of $5,044.26.
OneGold Storage Fees: On the other hand, OneGold charges a storage fee of 0.12% of the gold's value. Over the same twenty-year span, the cumulative storage fees would total $4,043.72. This results in a net saving of $1,000.54 compared to FGDL.
Understanding ETF Risks, Taxes, and Hidden Fees
Investors should be aware of the risk that ETFs may shut down, forcing them to liquidate their holdings, often at inopportune times. This can result in financial losses, especially if the market is down when the closure occurs. It’s important to conduct thorough research into the stability and track record of any ETF you are considering. Understanding the management team and the historical performance of the ETF can provide insights into its potential longevity and stability.
Tax implications and hidden fees are also significant factors to consider when investing in ETFs. Different types of ETFs can have varying tax treatments, which can affect your overall returns. Additionally, some trading platforms charge fees for purchasing ETFs, which can add up over time and reduce your investment capital. Being aware of these costs and planning accordingly can help you make more informed decisions. Properly accounting for all expenses associated with ETF investments is essential for maximizing returns.
Advantages of Holding Real Gold for Liquidity
Real gold provides significant liquidity, allowing investors to quickly convert their holdings into cash or other valuable assets. This is especially beneficial during times of economic instability when the value of gold tends to remain relatively stable. Unlike some ETFs that do not offer direct ownership of the underlying gold, holding physical gold gives you immediate access and control over your assets. This direct ownership can be particularly reassuring in volatile markets.
Moreover, while some ETFs allow for the redemption of shares for physical gold, the process often involves complex requirements and hidden terms. Investors should carefully review these conditions to ensure they align with their investment objectives. Choosing a transparent vaulted gold option like OneGold can simplify access to your assets, avoiding the complexities associated with ETF redemptions. This straightforward approach can be especially appealing to investors who value ease of access and liquidity.