Abrdn Physical Gold Shares ETF
SGOL seeks to track the spot price for gold, less trust expenses holding costs, by holding physical gold bars. The fund operates as a grantor trust, ensuring that trustees cannot lend out the underlying gold. Since Aberdeen acquired the fund from ETF Securities on April 27, 2018, SGOL has enhanced its custody arrangements. The Trust's assets are now securely custodied by JPMorgan, with vaulting facilities in Zurich and London.
On June 21, 2019, the ETF was renamed from Aberdeen Standard Physical Swiss Gold Shares ETF to Aberdeen Standard Physical Gold Shares. Additionally, a 10-for-1 share split on November 4, 2019, lowered the trading handle, making the shares trade at 1/100th of the spot price for gold. This adjustment makes SGOL particularly appealing to investors looking to make smaller, more accessible investments in gold.
$25.94
Change: ($-0.15) -0.58%Expense Ratio: 0.17%
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Expense Ratios vs Storage Fees
Expense ratios for Exchange-Traded Funds (ETFs) are the annual fees and costs associated with managing and operating the fund. These expenses typically cover management fees, administrative costs, and other operational expenditures. While seemingly small, expense ratios can have a notable impact on an ETF's profitability.
A higher expense ratio can erode returns over time, especially for long-term investors. This is because these costs are deducted from the fund's assets, leading to lower net returns for investors. When you buy physical bullion, you avoid ongoing expense ratios that ETFs charge, which can eat into your returns over time.
Expense Ratio for SGOL
| Years | Net Investment | ETF Fees 0.17% (avg) | OneGold Storage 0.12% (Gold) | Assumes 8% expected return |
|---|---|---|---|---|
| 1 | $15,000 | $17.00 | $12.00 | Initial Investment = $10,000 |
| 2 | $20,000 | $45.19 | $31.91 | Yearly Investment = $5,000 |
| 3 | $25,000 | $86.24 | $60.90 | |
| 4 | $30,000 | $142.00 | $100.29 | |
| 5 | $35,000 | $214.55 | $151.56 | |
| 6 | $40,000 | $306.19 | $216.33 | |
| 7 | $45,000 | $419.50 | $296.43 | |
| 8 | $50,000 | $557.33 | $393.90 | |
| 9 | $55,000 | $722.84 | $510.97 | |
| 10 | $60,000 | $919.57 | $650.14 | |
| 20 | $110,000 | $5,709.00 | $4,043.72 |
For investors comparing the SGOL Gold ETF to OneGold, it’s important to consider associated fees and net investment over time. Let's analyze the cost implications over a twenty-year period, assuming an 8% expected return, which matches gold’s approximate annual rate of return since 1971.
Comparsion of Fees
ETF Fees: The SGOL Gold ETF incurs fees averaging around 0.17%, resulting in a substantial cumulative fee over time. By year 20, the total fees paid to the ETF would amount to $5,709.00.
OneGold Storage Fees: Conversely, OneGold imposes lower storage fees, at 0.12% of the gold's value. By year 20, the total storage fees paid to OneGold would be $4,043.72, resulting in a savings of $1,665.28 compared to SGOL.
Understanding ETF Risks, Taxes, and Hidden Fees
One significant consideration is the variation in tax rates among different ETFs. Depending on the type of ETF and its underlying assets, tax implications can differ, impacting your overall returns. Additionally, investors need to be aware that some trading platforms charge fees for buying ETFs. These fees can vary widely and may eat into your investment capital if not carefully considered.
Another risk factor is the potential for ETFs to shut down. In such scenarios, investors are often forced to liquidate their holdings, potentially at unfavorable times when the market is down. This underscores the importance of understanding the stability and longevity of the ETFs in which you invest. Conducting research into the management and track record of an ETF can help mitigate this risk.
Advantages of Holding Real Gold for Liquidity
Investors often seek the liquidity of real gold, as it provides the flexibility to sell for currency or exchange for physical bullion as needed. Unlike certain ETFs where investors do not directly own the underlying gold, holding physical gold grants tangible ownership, enabling individuals to claim it at any time. This direct ownership can be particularly appealing in times of economic uncertainty or market volatility when tangible assets like gold tend to retain their value.
While some ETFs claim to offer the option to exchange for the underlying metal, this process may come with stringent requirements and obscure terms. Investors should carefully scrutinize the terms and conditions of such ETFs to ensure they align with their investment goals and risk tolerance. Opting for a true vaulted gold option like OneGold, provides a straightforward and transparent means of accessing your assets, without the complexities often associated with certain ETFs.