BlackRock launches tax-simplified gold ETF

Jun 18th, 2018 | By | Category: Commodities

BlackRock has launched a new actively managed ETF on the Cboe BZX Exchange. The iShares Gold Strategy ETF (IAUF US) provides exposure to the price of gold and has been designed to simplify tax filings as it does not require K-1 reporting for US investors.

BlackRock has launched a new gold ETF, iShares Gold Strategy ETF (IAUF US)

BlackRock has launched a new gold ETF, the iShares Gold Strategy ETF (IAUF US).

The Schedule K-1 is a tax document issued for an investment in partnership interests. K-1 filings are commonplace in US commodity ETFs, including BlackRock’s more established iShares Gold Trust (IAU US) which has over $11 billion in assets under management.

The Schedule K-1 effectively treats investors as partners of the investment vehicle, requiring them to annually report their share of the ETF’s income, whether or not it is distributed to them. Filing this tax form can be both complex and cumbersome for the investor.

IAUF has no such tax filing requirement, which could appeal to investors looking to simplify their tax affairs.

IAUF primarily invests in exchange-traded gold futures contracts and other exchange-traded and over-the-counter derivatives, as well as gold ETPs, to synthetically replicate the investment returns of physical gold. While technically not a passive ETF, the fund aims to correlate with the Bloomberg Composite Gold Index.

The new fund has an expense ratio of 0.25%, the same cost as IAU.

The launch comes at a time of improving investor sentiment towards the yellow metal, as the fate of global equity and bond markets grows more uncertain. According to the World Gold Council (WGC), global gold-backed ETFs/ETPs enjoyed their strongest inflows in over a year during April.

WGC is rumoured to be launching a new lower-fee gold ETF sometime soon. It is believed that this new fund will have an expense ratio of 0.25%, which will rival that of IAU; however, WGC has yet to release a formal statement on this.

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