Correction: Two Low-Cost Gold ETFs See AUM Exceed $300 As Investors Look For Safe-Havens
Correction: Kitco News incorrectly reported GraniteShares gold ETF BAR had an AUM of more than $350 million. The company's total assets under management at the start of October was $350 million. As of Oct. 3 BAR had assets valued at $280 million. The article has been updated to reflect the correct values.
(Kitco News) -Investors appear to be the clear winners in the ongoing fee war among gold-backed exchange traded funds.
This past month has been a milestone for two low-cost gold-back ETFs. Last month, after celebrating its one-year anniversary, GraniteShares said its company last month saw its assets under management surpass $350 million; the company's flag ship product (NYSE: BAR), which as of Oct. 3 saw its assets under management surpass $280 million.
The ETF offers the lowest cost investment product in the gold market with an expense ratio of 17.5 basis points.
Not to be outdone, SPRD Gold Minishares, the newest low-cost ETF (NYSE: GLDM), launched four months ago, saw its asset under management hit $312 million last month.
The increased inflows came as equity markets sold off sharply in October, seeing their worst month since the financial crisis.
In a recent interview with Kitco News, Will Rhind, CEO of GraniteShares, said that he is pleased with the growth he has seen in BAR in its first year. He added that in the current environment gold investors are paying close attention to their fees.
While gold is an attractive defensive asset in the face of an equity market correction, Rhind said that the big threat investors need to pay attention to is a surprise rise in inflation.
“The numbers at the moment aren’t the most exciting, they are still the most positive backdrop inflation we have seen in more than 10 years and if that continues gold will benefit,” he said. “Higher inflation is the one risk that investors haven’t prepared for in their portfolio.”
In an email statement to Kitco News, George Milling-Stanley, head of gold investments at State Street Global Advisors and the marketing agent behind SPRD GLD products, said that the growth in low-cost ETFs is another sign that the gold market is in a healthy space.
“[The numbers] confirm our view that investors are once again turning to gold as a defensive asset, offering some protection against the unexpected, whether these tail risks are macroeconomic or geopolitical in nature. This source of demand is coming in addition to the traditional reasons for allocating to gold such as diversification, liquidity, relatively low volatility, and the potential to improve risk-adjusted returns,” he said. “Surpassing $300 million in assets in just four months is a considerable achievement.”
The comments come as the World Gold Council said that gold holdings in global ETFs rose by 16.5 tonnes in October, the first monthly inflows in four months.
SPRD Gold Shares, (NYSE: GLD) the world’s biggest gold-backed exchange traded product led the market with inflows of 11.9 tonnes last month.
“Global assets under management in gold-backed ETFs rose by 3.1%, on the back of global markets experiencing the worst October since the 2008 financial crisis. North American and European funds benefited from positive gold price performance, closing out the month with inflows of $561 million (1.2% increase in AUM) and $678 million (1.7% increase in AUM), respectively,” said Juan Carlos Artigas, director of investment research at the World Gold Council, in a press release.