An option from the Select 50
If you decide to include the precious metal in your portfolio then you might want to think about using the iShares Physical Gold ETC, which is a member of Fidelity’s Select 50 list of handpicked funds. It is a large, liquid security that is traded on the London Stock Exchange and aims to track the return of the gold spot price.
The exchange traded commodity (ETC) offers investors an easily accessible and transparent exposure to the precious metal. It is designed to replicate the day-to-day movement of the price of gold, less fees, by holding gold bullion. At the end of April this amounted to an incredible 197.49 tonnes1, with the bars safely segregated and kept in a secure location.
How has it performed?
Over the 5 years to the end of April the iShares Physical Gold ETC generated an annualised return of 12.29%. This was very close to the 12.46% produced by its benchmark, the LBMA Gold Price1. Please remember past performance is not a reliable indicator of future returns.
If you are thinking of investing, it is important to be aware that the shorter-term performance can be more volatile than these figures suggest. For example, looking back over the last decade there have been 5 calendar years of negative returns and 4 where there was a positive double digit increase1.
No income
Another point to consider is that there is no income, which is particularly relevant at the moment with many savings accounts and low risk money market funds yielding around 5%. Please note this yield is not guaranteed and will fluctuate in line with interest rate movements. The corollary to this is that if interest rates come down more than expected it could increase the appeal of gold still further.
How do the costs stack up?
It is good to see that the Total Expense Ratio is a very modest 0.12%1.
More on iShares Physical Gold ETC
| (%) As at 31 May |
2019-2020 | 2020-2021 | 2021-2022 | 2022-2023 | 2023-2024 |
|---|---|---|---|---|---|
| Gold | 32.0 | 6.2 | -3.8 | 6.4 | 17.8 |
Past performance is not a reliable indicator of future returns.
Source: Refinitiv, S&P GSCI Gold total returns in US$ from 31.5.19 to 31.5.24. Excludes initial charge.
Source:
1 iShares by BlackRock, 30 April factsheet. Performance data is in USD on a NAV basis.