Gold ETFs Regain Luster as Gold Hits Record Highs

Gold prices have shot up to historic highs – outshining broader markets and driving up demand for gold ETFs.

Investors often use gold ETFs to diversify away from stocks and bonds. Gold has the lowest correlation to the S&P 500 of all asset classes. The precious metal has also proven a popular hedge against geopolitical risk (of which there is plenty) and, at times, against inflation.

Global gold ETFs suffered their ninth straight month of outflows in February, but the trend started to reverse in March. Both the SPDR Gold Trust (GLD) and SPDR Gold MiniShares Trust (GLDM) have seen bid-up demand over the past month despite suffering net outflows for the first quarter.

Smaller ETFs: Time to Shine

GLD dominated over the last 30 days with net inflows of more than $950 million and total returns of 12.8% year-to-date – roughly tracking the price of gold bullion itself. GLDM was the second most popular, bringing in more than $350 million in new money, with shares up 13% so far this year.

These two products are practically identical, but GLDM typically trades at a lower share price than GLD, with an expense ratio of 0.10%. This makes it one of the cheapest on the market and the better choice for newer, smaller retail investors looking to buy and hold from a strategic standpoint.