SSGA’s ‘MiniShares’ gold ETF surpasses $1bn AUM

Sep 30th, 2019 | By | Category: Commodities

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State Street Global Advisors (SSGA) has announced that its SPDR Gold MiniShares Trust (GLDM US) has surpassed $1 billion in assets under management, less than 15 months after the ETF’s debut on NYSE Arca in June last year.

Matthew J Bartolini, Head of SPDR Americas Research

Matthew J Bartolini, Head of SPDR Americas Research.

The fund was launched in collaboration with the World Gold Council (WGC).

With an expense ratio of 0.18%, GLDM is one of the cheapest gold ETFs in terms of management fee, which is a significant factor behind the fund’s success.

According to research from WGC, low-cost gold ETFs – those with expense ratios of 20 basis points or less – have recorded positive flows for 14 of the past 15 months and have increased their collective holdings by 37% so far this year, as of the end of August.

The fund has also benefitted recently from a rally in the gold price which has risen 14.8% from $1,295/oz on 1 June 2019 to $1,487/oz on 30 September 2019.

Demand for gold exposure has been increasing as investors seek out safe-haven assets to buffer their portfolios against geopolitical risks such as the ongoing US-China trade dispute and the possibility of a no-deal Brexit.

Lower global interest rates have also contributed to gold’s rally by decreasing the opportunity cost of holding non-interest-bearing assets such as gold, making them relatively more attractive.

GLDM’s success may also be due to its uncommon structure. The fund is listed with a per-share trading price of 1/100th of an ounce of gold, as represented by the LBMA Gold Price PM (USD).

The share pricing strategy offers a low entry point, opening up gold investment to a broader client base. It is one of the significant differences between the fund and the seasoned $44bn SPDR Gold Shares ETF (GLD US), the first physically backed gold ETF in the US, which was also born from the partnership between the World Gold Council and SSGA.

An investment in GLD represents 1/10th of an ounce of gold. The fund charges 0.40%, which is at the more expensive end of the fee scale for gold ETFs; however, GLD is still popular in its own right. As the largest gold ETP available, it enjoys robust liquidity and relatively low bid-ask spreads – highly valued characteristics, especially by institutional investors who wish to conduct larger trades while keeping costs low.

Indeed, as investors have renewed their interest in gold, GLD has raked in over $5.2bn of net new inflows year-to-date.

Matthew Bartolini, Head of SPDR Americas Research at State Street Global Advisors, commented, “The combined resources of the World Gold Council, a leading authority on all aspects of the gold market, and State Street Global Advisors, a pioneer in ETF investing, provides gold investors with compelling investment offerings and robust research and thought leadership on the role of gold in a portfolio. Our low-cost gold ETF with a share price hovering around $15, GLDM has resonated with financial advisors, digital advice platforms, and buy-and-hold retail investors.”

Joe Cavatoni, Head of US, World Gold Council, added, “We are thrilled that the product has now passed $1bn in AUM. Working with State Street Global Advisors, we brought GLDM to market as a complement to GLD to further expand access to gold. “The continued momentum of both GLDM and GLD suggests that investors have embraced gold’s potential to be a source of liquidity and diversification.”

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