GraniteShares has announced that its NYSE Arca-listed GraniteShares Gold Trust (BAR US) has reached $500 million in assets under management on the back of strong inflows driven by growing uncertainty in equity markets.
William Rhind, Founder and CEO, GraniteShares.
Exposure to gold has historically offered important benefits to investors’ portfolios.
The commodity can act as a hedge against inflation, while its safe-haven status provides a degree of protection against geopolitical risk.
Conditions may also be favourable for gold going forward as stretched stock valuations, dovish monetary policy, continued political uncertainty in Europe, and unresolved US/China trade issues continue to put upwards pressure on the gold price.
Will Rhind, Founder, and CEO of GraniteShares, commented, “We’re delighted to see investors embrace our low-cost gold offering in today’s volatile market. From the beginning, our mission at GraniteShares has been to provide unique solutions for common pain points experienced by all investors.”
With an expense ratio of just 0.17%, BAR shares the title of the cheapest gold ETFs available in the US, a feature which has helped it gain popularity with investors.
“BAR’s swift accumulation of assets is a testament that our approach of bringing disruptive products to market with better structures and lower fees is resonating with the ETF investing community,” said Rhind.
The space has been hotly contested however. BAR originally launched with an expense ratio of 0.20%, the lowest price tag among similar products at that time. Its affordability helped to drive AUM to over $200m within just nine months of launch.
Its success did not go unnoticed, however, as rival issuers rolled out their own low-cost gold products. State Street Global Advisors and the World Gold Council launched the SPDR Gold MiniShares Trust (GLDM US), while Australia’s Perth Mint and white-label platform Exchange Traded Concepts developed the Perth MINT Physical Gold ETF (AAAU US). Both products hit the market in 2018 with expense ratios of 0.18%.
GraniteShares subsequently reduced the cost of BAR to 0.17% to reclaim its position as cheapest US-listed gold ETF; however, the title is now shared with the Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL US), which reduced its fee from 0.39% to 0.17% in December 2018.
Research from the World Gold Council shows a growing trend of lower-cost gold exchange-traded products luring away assets from higher-cost products.
In its April 2019 ETF flows report, the organization notes that low-cost gold ETPs – those with expense ratios of 0.20% or less – have added $878 million in net new assets over the past nine months, representing growth of 67% and approximately equal to all net inflows in North America over the same period.