FT Vest Gold Strategy Target Income ETF
The IGLD Gold ETF seeks to enhance income by employing a strategy that involves a long position in SPDR Gold Trust ETF (GLD) alongside call spreads using FLEX options. Unlike traditional ETFs that directly hold physical gold, IGLD achieves exposure to GLD through a wholly-owned subsidiary based in the Cayman Islands.
The fund aims to deliver consistent income, targeting an annual yield approximately 3.85% above the yields of one-month Treasury bills. To achieve this, IGLD utilizes short-term treasuries and cash-like investments in addition to its options strategy. This approach allows IGLD to participate in the price movements of GLD, primarily through call options, while employing a partial covered call strategy to convert a portion of potential upside into current income. However, it's important to note that IGLD does not provide downside protection; it fully participates in GLD's losses on a one-to-one basis.
$19.18
Change: ($-0.09) -0.47%Expense Ratio: 0.85%
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Expense Ratios vs Storage Fees
Gold ETFs charge expense ratios, annual fees that cover the costs of managing and operating the fund. These fees can seem minor but can accumulate over time, reducing your investment's net returns.
In contrast, holding physical bullion entails storage fees, which are costs associated with securely storing your gold. These fees are usually fixed, offering a predictable expense. Comparing the impact of ETF expense ratios with the fixed costs of storing physical bullion can help you decide the most cost-effective way to invest in gold.
Expense Ratio for IGLD
| Years | Net Investment | ETF Fees 0.85% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $85.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $255.38 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $429.04 | $60.90 | |
| 4 | $30,000 | $704.76 | $100.29 | |
| 5 | $35,000 | $1,062.30 | $151.56 | |
| 6 | $40,000 | $1,512.48 | $216.33 | |
| 7 | $45,000 | $2,067.28 | $296.43 | |
| 8 | $50,000 | $2,739.99 | $393.90 | |
| 9 | $55,000 | $3,545.28 | $510.97 | |
| 10 | $60,000 | $4,499.41 | $650.14 | |
| 20 | $110,000 | $27,256.76 | $4,043.72 |
When evaluating the IGLD Gold ETF compared to OneGold, it's necessary to weigh the associated costs and the impact on long-term investments. We'll review the financial implications over a span of twenty years, assuming an average return rate of 8%, which aligns with the historical annual return rate for gold since 1971.
Comparsion of Fees
ETF Fees: The IGLD Gold ETF has an average expense ratio of 0.85%. Over a period of twenty years, this translates to total fees amounting to $27,256.76.
OneGold Storage Fees: On the other hand, OneGold charges a lower storage fee of 0.12% of the gold's value. Over the same twenty-year timeframe, the storage fees would total $4,043.72, providing a cost advantage of $23,213.04 compared to the IGLD Gold ETF.
Understanding ETF Risks, Taxes, and Hidden Fees
Investors should be aware that ETFs may sometimes close down, requiring them to liquidate their holdings, potentially at unfavorable times. Such events can lead to financial losses, especially if the market conditions are not ideal. Researching the stability and management history of ETFs is essential to mitigate this risk. Evaluating the track record and expertise of the management team can provide insights into the ETF’s potential stability and longevity.
Additionally, it is important to consider the tax implications and hidden fees associated with ETFs. Different ETFs can have varying tax treatments, which can affect your overall returns. Trading platforms may also impose fees for purchasing ETFs, which can reduce your investment capital over time. Being mindful of these costs and incorporating them into your investment strategy can help you make more informed decisions. Understanding all associated expenses is crucial for optimizing your investment outcomes.
Advantages of Holding Real Gold for Liquidity
Owning physical gold offers unmatched liquidity, allowing investors to quickly convert their assets into cash or other valuables as needed. This is particularly beneficial during economic instability when gold's value tends to remain stable. Unlike some ETFs that do not offer direct ownership of the underlying gold, holding physical gold ensures immediate control over your assets. This tangible asset provides a sense of security in volatile markets.
Furthermore, while some ETFs offer the option to redeem shares for physical gold, the process can be complex and subject to stringent conditions. Investors should carefully review these terms to ensure they align with their investment goals. Opting for a 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 those who prioritize liquidity and ease of access.