- What is a gold ETF?
- 1. Gold commodity ETFs
- 2. Gold mining ETFs
- Top gold ETFs in the UK
- iShares Physical Gold ETC
- Invesco Physical Gold ETC
- WisdomTree Physical Gold
- Gold Bullion Securities
- VanEck Gold Miners UCITS ETF
- How to invest in gold ETFs
- Are gold ETFs a good buy?
- Frequently asked questions
- What is the best way to invest in physical gold?
- Is it better to buy physical gold or an ETF?
- Is it better to buy physical gold or digital gold?
- Does Vanguard have a gold ETF?
Whenever macroeconomic or political instability starts to rear its ugly head, gold exchange-traded funds, or ETFS, in the UK suddenly get popular. These financial instruments offer investors an indirect method of investing their wealth into the precious metal, a historically safe haven against economic volatility.
But what exactly is a gold ETF? And are they actually a good investment? Let’s break it down.
What is a gold ETF?
A gold exchange-traded fund focuses exclusively on investing investor capital into financial assets and securities related to gold. This includes both the physical metal as well as gold stocks. Both funds and shares can expose you to the gold sector, but ETFs are typically a less risky way to invest in gold.
The first gold ETF emerged in Australia in 2003 and in the US in 2004 in two different forms.
1. Gold commodity ETFs
Also known as a Physical Gold ETF, the fund manager invests shareholder capital into gold bullion, typically coins or bars. Because it holds commodities rather than stocks, this fund is more commonly referred to as an exchange-traded commodity or ETC.
The share prices of these ETCs are highly correlated with the movements of gold spot prices. And ETCs provide a far more convenient way for investors to store their wealth in gold. After all, owning physical gold requires safe storage, which can be difficult and expensive to access. Physical gold can also be harder to liquidate on short notice.
2. Gold mining ETFs
The fund manager invests shareholder capital into high-quality gold mining businesses worldwide.
As businesses produce cash flow, this type of gold ETF has the potential to deliver better performance for investors. However, mining companies are also exposed to several risks, which can make the fund significantly more volatile.
The share prices of these ETFs are partially correlated with the movement in gold prices but are primarily driven by the financial and operational performance of the mining stocks instead.
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Top gold ETFs in the UK
Here are a few of the top UK gold ETFs:
| Fund Name | Inception Date | Annual Fee | Fund Size | Description |
| iShares Physical Gold ETC (LSE:IGLN) | 8 Apr 2011 | 0.12% | £15.21bn | Tracks the gold bullion spot price using only responsibly sourced gold2 |
| Invesco Physical Gold ETC (LSE:SGLD) | 24 Jun 2009 | 0.12% | £14.87bn | Tracks the gold bullion spot price1 |
| WisdomTree Physical Gold (LSE:PHAU) | 24 Apr 2007 | 0.39% | £4.22bn | Tracks the physical gold price while complying with established standards3 |
| Gold Bullion Securities (LSE:GBS) | 15 Apr 2004 | 0.40% | £2.54bn | Tracks the physical spot price while complying with established standards4 |
| VanEck Gold Miners UCITS ETF (LSE:GDGB) | 25 Mar 2015 | 0.53% | £1.14bn | Invests in a diversified portfolio of world-leading gold mining stocks5 |
iShares Physical Gold ETC
The iShares Physical Gold ETC is a physical gold ETF, and aims to match the spot price of gold bullion as closely as possible after management fees are taken.
The fund only accepts gold bullion that meets the Good Delivery standards laid out by the London Bullion Market Association. Furthermore, all assets held are classified as responsibly sourced, with its custodian only allocating gold that was mined after 2012.
Invesco Physical Gold ETC
The Invesco Physical Gold ETC is another physical gold ETF, and aims to replicate the spot price movement of gold bullion as closely as possible, minus the annual management fees.
The physical gold owned by the ETC is held by JP Morgan Chase Bank in the London Vaults.
WisdomTree Physical Gold
As the name suggests, the WisdomTree Physical Gold ETF is a physical gold ETF designed to provide investors with a cost-efficient method of buying gold. It aims to track the spot price movements of gold bullion minus the annual management fees.
The physical gold owned by the ETF meets the Good Delivery standards laid out by the London Bullion Market Association. It’s held by HSBC Bank, which serves as the fund’s custodian.
Gold Bullion Securities
The Gold Bullion Securities ETC attempts to mimic the movements in physical gold spot prices minus annual management fees.
The physical gold owned by the ETF meets the Good Delivery standards laid out by the London Bullion Market Association. It’s held by HSBC Bank, which serves as the fund’s custodian.
VanEck Gold Miners UCITS ETF
The VanEck Gold Miners ETF is a gold mining ETF investing shareholder capital into a diversified portfolio of 49 publicly traded gold mining stocks. The fund is designed to track the performance of the NYSE Arca Gold Miners Index by investing in industry-leading gold mining companies.
A large chunk of the fund’s portfolio consists of Canadian businesses, with a the rest consisting of American and Australian firms. Its largest holding is Newmont Corp which represents 12% of the underlying investment portfolio.
How to invest in gold ETFs
ETFs and ETCs can be bought and sold like regular stocks. And providing the ETF is listed on an exchange to which a brokerage account has access, investors can quickly add these financial instruments to their personal portfolios.
Here are the general steps involved when investing in a gold ETF:
- Based on investment goals, decide whether to invest in a gold mining ETF or gold bullion ETC
- Research the selected funds and clearly understand the fee structure
- Buy shares in the fund with a brokerage account
Are gold ETFs a good buy?
Gold ETFs provide a great deal of convenience to investors. Beyond solving many of the expensive logistical challenges of transporting and storing physical gold, these financial securities are far more liquid. This is why they remain a top choice for gold investors in the UK.
However, there are some caveats. Management fees can slowly diminish wealth, especially if the gold spot price does not increase over time. Furthermore, the share price of an ETF can be subject to higher volatility than the commodity itself, making it a riskier alternative.
Whether a gold ETF is a good buy versus purchasing physical gold ultimately depends on the individual’s financial goals and risk tolerance.
Frequently asked questions
What is the best way to invest in physical gold?
Gold has long served as a safe haven asset that can be used to protect wealth, especially during times of economic turmoil. There are lots of different ways to invest in physical gold, including gold bullion and jewellery. Each has its advantages and disadvantages, so we created a comprehensive guide to help investors.
Is it better to buy physical gold or an ETF?
Determining whether physical gold or a gold ETF is a better investment depends on personal circumstances, risk tolerance, and objectives. There are some key differences to the process outlined in the table below:
| Physical Gold | Physical Gold ETF | |
| Ownership | The investor owns physical gold bullion | The investor has shares in an exchange-traded fund that invests in gold assets. |
| Storage | An investor needs to store gold in a safe location such as a vault. | Storage is handled by the fund. |
| Liquidity | Physical gold can take time to sell at a good price. | An investor can sell shares at near-market price almost instantly. |
| Expenses | Investor often has to pay premiums when buying and selling physical gold. If the investor is relying on a secure third party for storage, these additional costs must be considered. | Exchange-traded funds charge an annual management fee. The fee depends on the fund. However, the annual expense ratio is typically low, between 0.2% and 0.5%. |
| Risk | Investors must consider the risks of loss, damage, or theft. | Investors must consider market volatility and custodian risk. |
| Privacy | Investors can park their wealth in a private asset that can be kept out of sight and off the grid. | Investments in a physical gold ETF are fully traceable and held inside a brokerage. |
| Convenience | Physical gold is typically less continent compared to an ETF as there are additional considerations such as shipping, storage, and reselling. | ETF trades just like a stock, making it very fast and easy to acquire without having to worry about delivery, storage, and reselling. |
Is it better to buy physical gold or digital gold?
Determining whether physical gold or digital gold is a better investment depends on personal circumstances, risk tolerance, and objectives. There are some key differences to the process outlined in the table below:
| Physical Gold | Digital Gold | |
| Ownership | The investor owns physical gold bullion | Investors own a claim on physical gold that is stored by a third party in a vault. |
| Storage | An investor needs to store gold in a safe location such as a vault. | Storage of gold is handled by a third party. |
| Liquidity | Physical gold can take time to sell at a good price. | Digital gold is highly liquid, enabling investors to buy or sell their assets at any time, very quickly. |
| Convenience | Physically, gold is typically less continent compared to digital gold as there are additional considerations such as shipping, storage, and reselling. | Digital gold can be bought, sold and managed from a digital platform such as an app or website, making it far more convenient than physical gold. |
| Risk | Investors must consider the risks of loss, damage, or theft. | Investors must consider the risk of the digital gold platform being hacked, the company going bankrupt, or the potential for mismanagement. |
| Transparency | Investors can physically inspect and verify the gold. | Less transparency than buying physical gold, and requires trust in the platform’s inspection process. |
Does Vanguard have a gold ETF?
No. As of April 2025, Vanguard currently does not offer a dedicated gold ETF. However, the Vanguard Global Capital Cycles Fund is a mutual fund that aims to invest at least a quarter of its assets in precious metals like gold and silver as well as mining companies. This offers investors indirect exposure with Vanguard mutual funds.
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