Gold’s investment characteristics, rooted in multiple sources of demand across global economic and business cycles, may help gold serve multiple roles in an investor’s portfolio — during good times and bad.
Gold is often classified as a commodity alongside other precious metals or broader commodities, like oil and real estate. But with gold’s unique fundamentals and characteristics, it may warrant its own classification in an investor’s portfolio.
Investors can access gold in many different ways — from bars and coins to mutual funds and futures contracts. But gold-backed exchange traded funds (ETFs) offer a high degree of flexibility, transparency, and accessibility to the gold market with the cost-effective liquidity benefits of an ETF wrapper.
Learn about the different ways gold can be added to a portfolio and the potential advantages of accessing gold using an ETF.
In November 2004, State Street Global Advisors launched SPDR GLD®, the first US gold-backed ETF. GLD’s arrival made it convenient and cost effective for investors to have gold exposure in their portfolios. We’ve built a dedicated team of SPDR gold strategists to help investors understand how gold can fit in a portfolio, and launched GLDMSM in 2018 in response to growing investor need for a low-cost, gold-backed ETF option.
1 Diversification: Bloomberg Finance L.P and State Street Global Advisors, as of September 30,2020. Gold’s monthly correlation to the S&P 500 Index and Bloomberg Barclays Aggregate Bond Index over the last 20 years are 0.05 and 0.18, respectively. Gold’s daily correlation to the S&P 500 Index and Bloomberg Barclays Aggregated Bond Index in 2020 are 0.38 and 0.20, respectively. Returns: Bloomberg Finance L.P., and State Street Global Advisors. During 2020 volatility, based on average monthly returns from 1/1/2020-9/30/2020, gold has provided a return of 24.57%, while the S&P 500 provided a return of 5.89 for the same period. On a longer-term basis, gold has returned 3.74% over a 10-year period from 9/30/2010 to 9/30/2020, and 10.13% for the 20 years from 9/30/2000 to 9/30/2020, while the S&P 500 provided a return of 13.730% and 6.41%, respectively, for the same periods ended 9//30/2020. Notes: gold is represented by LBMA gold price PM ($/oz.). Past performance is not a guarantee of future results. Liquidity: Source: World Gold Council, date range from 01/01/2020 to 9/20/2020. Gold has maintained an average daily trading volume of $189 billion, or $47 trillion annually, which is on par with the S&P 500 average daily trading volume of $212 billion.
2 Bloomberg Finance L.P., and State Street Global Advisors, as of August 31, 2020.
3 Bloomberg Finance L.P, World Gold Council and State Street Global Advisors. Note: SPDR® Gold Trust GLD has a $1.4 billion daily average volume and a 0.01% average bid-ask spread from 01/01/2011 to 09/30/2020. The second biggest gold-backed ETF has a $135 million daily average volume and a 0.08% bid-ask spread from 01/01/2011 to 09/30/2020. GLD assets under manager (AUM) is $77 billion which equates to 1,268.5 tons while the second biggest gold-backed ETF AUM is $31 billion which equates to 518.1 tons, as of 09/30/2020.
A basic good used in commerce that is interchangeable, or “fungible,” with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. For example, crude oil is a commodity that is used to make motor fuels, heating oil and lubricants.
A strategy of combining a broad mix of investments and asset classes to potentially limit risk, although diversification does not guarantee protection against a loss in falling markets.
In modern portfolio theory, diversification is an approach used to potentially reduce the overall risk of the portfolio by holding a mix of assets with low correlations to each other. The potential benefit of holding uncorrelated assets is that some investments may rise while others fall.
The ability to quickly buy or sell an investment in the market without impacting its price. Trading volume is a primary determinant of liquidity.
A risk-based profitability measurement framework for analyzing risk-adjusted financial performance; it is designed to provide a consistent view of profitability across different assets.
For SPDR® Gold Trust and SPDR® Gold MiniSharesSM Trust:
Investing involves risk, and you could lose money on an investment in each of SPDR® Gold Shares Trust (“GLD®”) and SPDR® Gold MiniSharesSM Trust (“GLDMSM”), a series of the World Gold Trust (together, the “Funds”).
Commodities and commodity-index linked securities may be affected by changes in overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities.
Investing in commodities entails significant risk and is not appropriate for all investors.
Important Information Relating to SPDR® Gold Trust (“GLD®”) and SPDR® Gold MiniSharesSM Trust (“GLDMSM”):
The SPDR Gold Trust (“GLD”) and the World Gold Trust have each filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for GLD and GLDM, respectively. Before you invest, you should read the prospectus in the registration statement and other documents each Fund has filed with the SEC for more complete information about each Fund and these offerings. Please see each Fund’s prospectus for a detailed discussion of the risks of investing in each Fund’s shares. The GLD prospectus is available by clicking here and the GLDM prospectus is available by clicking here. You may get these documents for free by visiting EDGAR on the SEC website at sec.gov or by visiting spdrgoldshares.com. Alternatively, the Funds or any authorized participant will arrange to send you the prospectus if you request it by calling +44 (0)20 3395 6888.
None of the Funds is an investment company registered under the Investment Company Act of 1940 (the “1940 Act”). As a result, shareholders of each Fund do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act. GLD and GLDM are not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders of each of GLD and GLDM do not have the protections afforded by the CEA.
Shares of each Fund trade like stocks, are subject to investment risk and will fluctuate in market value.
The values of GLD shares and GLDM shares relate directly to the value of the gold held by each Fund (less its expenses), respectively. Fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them.
None of the Funds generate any income, and as each Fund regularly sells gold to pay for its ongoing expenses, the amount of gold represented by each Fund share will decline over time to that extent.
The World Gold Council name and logo are a registered trademark and used with the permission of the World Gold Council pursuant to a license agreement. The World Gold Council is not responsible for the content of, and is not liable for the use of or reliance on, this material. World Gold Council is an affiliate of the Sponsor of each of GLD and GLDM.
GLD® is a registered trademark of World Gold Trust Services, LLC used with the permission of World Gold Trust Services, LLC. MiniSharesSM and GLDMSM are service marks of WGC USA Asset Management Company, LLC used with the permission of WGC USA Asset Management Company, LLC.
NOTICE TO PERSONS IN THE UNITED KINGDOM ("UK")
GLD and GLDM is permitted to be marketed in the UK pursuant to either Article 42 of European Union Alternative Investment Fund Managers Directive (Directive 2011/61/EU) ("AIFMD") (as implemented under national laws); or (ii) can otherwise be lawfully offered or sold (including on the basis of an unsolicited request from a professional client).
GLD and GLDM is an alternative investment fund for the purpose of the European Union Alternative Investment Fund Managers Directive (Directive 2011/61/EU) ("AIFMD"). For purposes of the AIFMD, World Gold Trust Services, LLC is designated as the alternative investment fund manager ("AIFM") of GLD and GLDM.
Investing involves risk including the risk of loss of principal.
Commodity funds may be subject to greater volatility than investments in traditional securities. Investments in commodities may be affected by overall market movements, changes in interest rates, and other factors, such as weather, disease, embargoes, and international economic and political developments.
This material is for your private information. The views expressed are the views the SPDR® Gold Strategy Team and are subject to change based on market and other conditions. The opinions expressed may differ from those with different investment philosophies.
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