It’s Never Too Late to Consider an Allocation to Gold
A global pandemic has brought dramatic change to asset markets around the globe. As equity and bond markets upended in early 2020, gold shined as a valuable source of diversification, risk-adjusted returns, and liquidity.¹
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 ® Gold Shares, the first US gold-backed ETF. SPDR Gold Shares’ 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.
Invest in SPDR Gold ETFs
SPDR Gold Shares® (2840) the world’s largest and most liquid gold-backed ETF offers strategic, long-term investors access to the gold market.3
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. Diversification does not ensure a profit or guarantee against loss. 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. There can be no assurance that a liquid market will be maintained for ETF shares
2 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.
Commodities 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.
Diversification 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.
Diversification Benefits 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.
Liquidity The ability to quickly buy or sell an investment in the market without impacting its price. Trading volume is a primary determinant of liquidity.
Risk-Adjusted Return 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.
Important Risk Information
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.
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should not be relied upon as such. The value of units in the GLD ETF (the “Fund”) may fall or rise. Past performance of the Fund is not indicative of future performance. Distributions from the Fund are contingent on dividends paid on underlying investments of the Fund and are not guaranteed. Listing of the Fund on the HKEX/ SGX does not guarantee a liquid market for the units and the Fund may be delisted from the HKEX/ SGX. The Fund’s Prospectus is
available from State Street Global Advisors or can be downloaded from http://www.spdrgoldshares.com/
The prospectus in respect of the Singapore offer of the shares in the Trust is available and may be obtained upon request from State Street Global Advisors Singapore Limited ("SSGA") (Co. Reg. No: 200002719D). Investors
should read the prospectus of the Trust before deciding whether to purchase Shares. Shares in the Trust are not obligations of, deposits in, or guaranteed by, World Gold Trust Services, LLC, SSGA or any of their affiliates. The value of Shares and the income accruing to such Shares may fall or rise. You should consider whether the Trust is suitable for you. If in doubt, you may wish to seek advice from a financial adviser before making a commitment to purchase Shares. Investors have no right to request the Sponsor to redeem their Shares while the Shares are listed. It is intended that holders of Shares may only deal in their Shares through trading on the SGX-ST. Listing of the Shares on the SGX-ST does not guarantee a liquid market for the Shares.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs’ net asset value. Brokerage commissions and ETF expenses will reduce returns.
Past performance is not a guarantee of future results.
Diversification does not ensure a profit or guarantee against loss.
Investing in commodities entails significant risk and is not appropriate for all investors.
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ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns. Standard & Poor’s®, S&P® and SPDR® are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
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