The Goldman Sachs Physical Gold ETF (BATS:AAAU) is just one of many ways Wall Street has tapped into retail investor demand for gold in recent years.
As an exchange-traded fund (ETF), it trades throughout the day on an exchange just like a stock, with a bid and an ask, and can be bought or sold through a brokerage account from virtually anywhere. This makes it fairly beginner-friendly.
When markets are open, the ETF’s price is designed to closely track the spot price of gold over time, minus a small ongoing fee. Instead of owning mining stocks or futures contracts, investors get exposure tied directly to physical gold held on their behalf.
That said, this is only one option in a crowded field of gold ETFs, each with its own structure, costs, and trade-offs. If you’re considering this ETF as a way to add gold to your portfolio, here’s what you need to know to make an informed decision.
What is AAAU?
What is the Goldman Sachs Physical Gold ETF?
This is a physically backed gold ETF structured as a grantor trust. That means the fund does not invest in stocks, bonds, or derivatives. Instead, it holds physical gold bullion on behalf of shareholders, and each share represents a pro rata interest in that gold.
Most ETFs are structured as open-end funds under the Investment Company Act of 1940. Grantor trusts are different. They are typically used for physical commodity ETFs and operate as simple pass-through vehicles.
The trust holds a fixed pool of assets — in this case, physical gold — and does not actively manage or trade those holdings. Investors are treated as owning a direct slice of the underlying gold rather than shares in a managed portfolio.
This ETF launched in July 2018 and has grown to more than $3 billion in assets under management. Its goal is straightforward: to track the spot price of gold over time, minus fees, by holding physical gold in secure custody.
How to invest
How to buy the Goldman Sachs Physical Gold ETF
- Step 1: Open your brokerage account: Log in to your brokerage account where you handle your investments.
- Step 2: Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF’s trading page.
- Step 3: Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Step 4: Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
- Step 5: Submit your order: Confirm the details and submit your buy order.
- Step 6: Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings
Holdings of the Goldman Sachs Physical Gold ETF
This ETF is a spot gold product, meaning it holds physical gold bullion rather than stocks, bonds, or derivatives. Its objective is to track the London Gold Fixed price, which is quoted in U.S. dollars and serves as a global benchmark for spot gold pricing.
The trust does not use futures, swaps, or other synthetic instruments. Instead, it holds fully allocated physical gold bars in secure vaults. The gold is stored with approved custodians and is subject to periodic independent audits to verify existence and ownership.
Although the ETF may hold thousands of individual gold bars, investors do not interact with these holdings directly. When demand for shares rises or falls, authorized participants create or redeem shares by delivering physical gold into the trust or removing it.
This process keeps the ETF’s net asset value closely aligned with the spot price of gold while ensuring that changes in investor demand are reflected by actual gold moving in or out of custody.
Should I invest?
Should I invest in the Goldman Sachs Physical Gold ETF?
The case for investing in gold starts with your time horizon and intent. For short-term speculation, some investors prefer gold futures because leverage can amplify price moves, for better or worse. A physically backed gold ETF is less sensitive in the short run, but it still provides direct exposure to gold prices without the complexity of futures markets.
For a long-term allocation, gold is often used to diversify a portfolio and hedge against risks such as currency debasement, inflation, or periods of financial stress. In that context, a gold ETF like this one offers a practical alternative to buying physical bullion outright. You avoid the costs and logistics of transportation, storage, insurance, and security, as well as the wider spreads often found in the retail gold market.
Because it trades on an exchange, this ETF typically has a narrow bid-ask spread, making it easier and cheaper to enter or exit a position than buying or selling physical gold. For investors who want long-term gold exposure with minimal operational friction, this ETF can serve as a simple and efficient tool within a diversified portfolio.
Dividends
Does the Goldman Sachs Physical Gold ETF pay a dividend?
Gold does not generate income, and this ETF holds physical gold bullion rather than income-producing assets. Because there are no interest payments or cash flows from the underlying gold, the ETF does not pay a dividend.
Expense ratio
What is the Goldman Sachs Physical Gold ETF’s expense ratio?
This ETF has an expense ratio of 0.18%, meaning it costs about $18 per year for every $10,000 invested. It is deducted directly from the fund’s assets on the back end and reduces returns over time.
Historical performance
Historical performance of the Goldman Sachs Physical Gold ETF
| 1Yr | 5Yr | |
| Net Asset Value | 76.83% | 21.50% |
| Market Price | 72.84 | 21.12% |
The bottom line
This is one of many physically backed gold ETFs offered by a reputable provider and follows standard best practices for gold exposure. It uses a grantor trust structure, holds fully allocated physical gold, undergoes regular audits, and is designed to closely track the spot price of gold over time.
That makes it a versatile and credible option for investors looking to add gold to a long-term portfolio without dealing with the logistics of physical ownership. At the same time, it sits squarely in the middle of the pack. There are competing gold ETFs with lower fees, greater liquidity, or larger asset bases, so this one is not the best.
For investors who value brand familiarity and straightforward physical backing, this ETF does the job. For those willing to shop around, there may be alternatives that offer similar exposure with incremental advantages on cost or trading efficiency.
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FAQ
Investing in the Goldman Sachs Physical Gold ETF FAQ
Is the Goldman Sachs Physical Gold ETF a good investment?
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That depends on why you want gold in your portfolio. This ETF can work well as a long-term diversifier or hedge against inflation, currency risk, and financial stress. It is less suited for investors seeking income or short-term leveraged exposure. As with any gold ETF, returns will depend entirely on the price of gold rather than earnings or cash flow growth.
Is the Goldman Sachs Physical Gold ETF backed by physical gold?
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The ETF is fully backed by physical gold bullion held in secure vaults. It uses a grantor trust structure, meaning shares represent a pro rata interest in allocated gold bars rather than futures contracts.
What is the best-performing gold ETF?
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According to data compiled by ETFDb, the strongest-performing gold ETF over the past five years has been the ProShares Ultra Gold ETF (NYSEMKT:UGL), with annualized returns of 38.64%. That performance comes with substantially higher volatility, since the fund seeks to deliver twice the daily return of gold using derivatives and does not hold physical gold.