A New Gold ETF For Frugal Investors

Exchange-traded funds have made gold investing accessible to a broader swath of investors, a theme pioneered by the SPDR Gold Shares GLD. Today, GLD is the world's largest bullion-backed ETF and that success has, predictably, invited plenty of competition.

Typically, the most effective way for issuers to compete with established rivals when it comes to “me too” or copycat ETFs is on cost. The iShares Gold Trust IAU is not as big as GLD, but IAU has over $9.1 billion in assets under management. That is a testament to investors preferring IAU's annual fee of 0.25 percent compared to GLD's expense ratio of 0.4 percent.

Well, there is a new sheriff in town when it comes to low-priced gold ETFs. The GraniteShares Gold Trust BAR debuted Thursday and carries an annual fee of 0.2 percent, or $20 on a $10,000 investment. That makes BAR the least expensive gold ETF on the market today.

Hitting The Bar

“BAR is the third fund in the GraniteShares product suite, joining the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF COMB and the GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF COMG, both of which launched in May 2017 and are also among the least expensive commodities funds available,” according to ETF Trends.

Like GLD and IAU, BAR is designed to track the price of gold. The new GraniteShares ETF holds physical gold, vaulted in London. The ETF's bar list will be published daily and its vaults will be inspected twice a year, according to GraniteShares.

GraniteShares CEO Will Rhind “said the gold in BAR is going to be independently inspected by a third party specialist firm two times a year, which means investors can access the reports and look at the gold bars GraniteShares hold on its website,” according to ETF Trends.

Good Timing

Timing can be issue with new ETFs, but in the case of BAR, the rookie gold ETF could be well-timed. Although equity market volatility is low, investors have recently been flocking to gold due in part to geopolitical volatility. In August, investors added over $1 billion to GLD and nearly $250 million IAU.

Bolstering the case for BAR is the weak dollar. The U.S. Dollar Index is down more than 9 percent this year, highlighting the greenback's status as one of the worst-performing major currencies in the world. Commodities, including gold, are denominated in dollars, meaning a weak dollar is usually beneficial to commodities.

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Disclosure: The author owns shares of IAU.