BlackRock unveils low-cost ‘micro’ gold ETP in the US

Jul 9th, 2021 | By | Category: Commodities

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BlackRock has launched the iShares Gold Trust Micro (IAUM US) on NYSE Arca.

BlackRock unveils low-cost ‘micro’ gold ETP in the US

The ETP is likely aimed at fee-conscious buy-and-hold investors.

With an expense ratio of just 0.15%, IAUM becomes the cheapest gold exchange-traded product in the US in terms of management fees.

The ETP, which is backed by physical gold, has been listed with a per-share trading price of 1/100th of an ounce of gold, as measured by the LBMA Gold Price PM (USD).

IAUM’s closing price on 7 July was $18.05 compared to $34.36 for BlackRock’s blockbuster gold ETP – the $29 billion iShares Gold Trust (IAU US). IAU comes with a higher expense ratio of 0.25%.

IAUM’s lower share price entry point and cheaper management fee are likely aimed at enticing fee-conscious buy-and-hold retail investors.

The ETP’s introduction is comparable to the 2018 launch of the SPDR Gold MiniShares Trust (GLDM US). GLDM was brought to market by the World Gold Council and State Street Global Advisors and, with an expense ratio of 0.18%, is substantially cheaper than SPDR Gold Shares (GLD US), the pair’s $60bn juggernaut of a gold ETP, which costs 0.40%.

GLDM, which currently houses over $4.4bn in assets, is one of several lower-cost gold ETPs that have quickly gained prominence amongst cost-conscious investors. Other products in this category include the $2.4bn Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL US), the $1.0bn GraniteShares Gold Trust (BAR US), and the $380 million Goldman Sachs Physical Gold ETF (AAAU US). Each of these ETPs comes with expense ratios of 0.17% or 0.18%.

Larger, higher-fee gold ETPs such as IAU and GLD are still popular in their own right, however. Their robust liquidity and relatively low bid-ask spreads are both highly valued characteristics, especially by institutional investors who may wish to conduct larger trades while keeping costs low.

In Europe, the gold ETP market is arguably more competitive with even the market-leading ETPs – the local equivalents of GLD, such as the $13.3bn iShares Physical Gold ETC (IGLN LN) and $12.9bn Invesco Physical Gold ETC (SGLD LN) – having lowered their fees to the level offered by iShares’ new US mini product. Both these products now come with a fee of 0.15% but they originally commanded much higher fees. SGLD, for example, was launched with a fee of 0.29%.

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