ETC essentials · 2 minute read
How do I compare two gold ETCs?
The short answer
Compare the backing, legal structure, annual charge, trading costs and currency hedging. Two products can follow gold prices while giving you different costs, risks and investor rights.
Why it matters
Start by checking that you are comparing similar investments. A physically backed gold ETC, a futures-based product and an ETF holding gold-mining companies do different things.
For two physically backed gold ETCs, compare:
- Backing: how is the gold held and safeguarded?
- Structure: who issues the securities and what rights do investors have?
- Annual charge: what does the stated figure include?
- Trading costs: what spread, commission and currency-conversion charges apply?
- Currency hedging: does either product try to reduce exchange-rate movements?
- Price tracking: how closely has each followed its stated gold benchmark after costs?
Buying a listing in euros does not, by itself, make the investment euro-hedged.
Use the ISIN—the security’s identifying code—to confirm the exact product. Different exchange listings can use different tickers and trading currencies.
A simple example
Two hypothetical gold ETCs charge 0.15% and 0.25% a year.
On a constant €10,000 investment value, that is approximately €15 versus €25 annually. The difference is €10.
A wider trading spread or extra broker charges could outweigh that saving. The lower annual charge also tells you nothing about the strength of the legal arrangements.
What to check
- Do both products provide the same type of gold exposure?
- Are both physically backed?
- What are the custody and security arrangements?
- What will your broker charge to buy and sell?
- Is either product currency-hedged?
- Are return figures measured over the same period and in the same currency?
Key term explained
The bid–ask spread is the gap between the available selling and buying prices. It is a trading cost separate from the annual product charge.
Compare the whole product, not just the headline fee.
Sources
The fee example is hypothetical and does not quote current product charges.