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June 27, 2018 at 01:37 PM
Investors who are seeking the diversification benefits gold exposure can bring to a portfolio now have another option on the table.
State Street Global Advisors partnered with the World Gold Council, the market development organization for the gold industry, to launch a new low-cost gold exchange-traded fund.
SPDR Gold MiniShares Trust (GLDM) offers a net and gross expense ratio of 0.18%, one of the lowest available total expense ratios among all gold exchange-traded products. GLDM will be initially listed at a per-share trading price of 1/100th of an ounce of gold, as represented by the LBMA Gold Price PM (USD).
How can gold play a role in portfolios?
According to Matt Bartolini, head of SPDR Americas Research, having gold in portfolios can mitigate drawdowns and provide diversification elements because of its low to negative correlation to traditional assets like stocks and bonds.
“The idea in this type of market is that you should be positioned for normal bouts of volatility,” he told ThinkAdvisor. “You should be looking for uncorrelated or low-correlated assets to mitigate equity drawdowns as well as what we’re seeing in the bond market, where you do have rising rates and a flattening yield curve.”
For Joseph Cavatoni, managing director at the World Gold Council, the focus is on gold’s role in a long-term portfolio.
“We’re talking to them about a long-term investment horizon,” Cavatoni told ThinkAdvisor. “While on the short term there may be more volatility and there may be price movement that’s unpredictable, where the conversation always go with us — in particular with State Street’s involvement — is around the long-term investment portfolio. We’re not looking at speculative excitement and so forth.”
