IAU vs SGOL

IAUBiShares Gold Trust

SGOLBabrdn Physical Gold Shares ETF

In short

IAU Gold bars in a London vault, wrapped in a ticker since 2005. IAU is the veteran heavyweight of physical gold funds: bullion held by a custodian bank, priced off the London gold benchmark, tradable all day.

SGOL A 2009-vintage trust that owns actual gold bars and does exactly one job: track bullion's price after a 0.17% fee. Middle of the pack on cost, front of the pack on doing what the prospectus says.

Stated mandate

IAU The Trust seeks to reflect the price of gold bullion, after accounting for its expenses and liabilities. It provides exposure to physical gold.

SGOL The Trust seeks to track the price of physical gold bullion, after deducting its expenses.

Why people hold it

• IAU A twenty-year paper trail. Launched in 2005, with bullion held by JPMorgan Chase Bank's London branch and two decades of SEC filings anyone can read.sec.gov
• No futures, no swaps, no roll mechanics. Each share is a fractional undivided interest in gold the trust actually holds, marked to the LBMA gold price.sec.gov
• Costs less than the original US gold ETF: 0.25% a year against GLD's 0.40%. It's also one of the most actively traded funds in the physical gold group.
• Simple mandate, cleanly executed: the trust aims to reflect the gold price minus its expenses, and it has tracked that job about as closely as the structure allows.

• SGOL Plain plumbing: a grantor trust holding physical bullion, with one job written into its own documents, to track the price of gold after deducting expenses.
• Tracks the metal about as closely as the wrapper allows, one of the cleanest mandate implementations among physical gold funds.
• Trading since 2009, through several full gold cycles, and now a multi-billion-dollar fund that changes hands actively.

Worth knowing

• IAU Fees sit above the cohort median (0.25% vs 0.17%). iShares sells a micro version of the same exposure, IAUM, at 0.09%, and GLDM charges 0.10%.
• The trust earns no income, so it sells gold to pay the sponsor's fee. The gold behind each share declines over time, and shareholders get no distributions.sec.gov
• Tax wrinkle: gains on a trust holding gold are treated as collectibles gains, which can carry a higher top long-term rate than most stock gains.sec.gov

• SGOL Cost sits at the category median: 0.17% a year, while IAUM (0.09%) and GLDM (0.10%) charge less to hold the same metal.
• Bullion throws off no income. This is a price-of-gold holding, not a cash-flow one, and the fee comes out of trust assets.
• One metal, no diversification. The shares go where gold goes, including the long flat stretches and sharp drawdowns.

Full IAU profile⁠

Full SGOL profile⁠