Most Gold ETFs Skim 0.40% Off the Top Every Year. One Charges a Quarter of That. Run the Math and the Difference Is a Family Vacation.

By far, the oldest and longest-standing gold exchange-traded products, or ETPs, generally charge around 0.4% annually in expense ratios. That applies both to closed-ended structures like the Sprott Physical Gold Trust (NYSEARCA: PHYS), which charges 0.39%, and also open-ended ETFs like the SPDR Gold Shares (NYSEARCA: GLD), which charges 0.40%.

Long term, those fees matter. Gold itself does not produce income. There are no dividends payments or bond coupons flowing in behind the scenes to offset management costs. That means the expense ratio comes directly out of your price return over time, deducted on the back end.

Now, admittedly, this has not mattered much during the gold bull run of recent years. When gold prices are surging, most investors barely notice the fee drag. But during flat or negative periods for bullion, those costs become much more painful because they continue compounding against you regardless of performance.

So as always, if your goal is gold exposure, I think keeping fees low is one of the most important variables you can control. One option that costs just one-quarter as much as GLD and PHYS is the SPDR Gold MiniShares Trust (NYSEARCA: GLDM) Here is what you need to know about it.

What Is GLDM?

GLDM is a physically backed gold bullion ETF. That means instead of using futures contracts or gold mining stocks to create exposure, the fund directly corresponds to audited physical gold bullion held in custody with JPMorgan Chase Bank. The holdings are independently audited, which allows GLDM’s market price to closely track the London Bullion Market Association (LBMA) gold price.

And those fees are where GLDM really stands out. GLDM charges just a 0.10% expense ratio. For a $10,000 investment, that works out to only $10 annually in fee drag versus roughly $39 or $40 annually for PHYS and GLD. That difference may sound trivial initially, but over long holding periods and larger portfolio sizes, it compounds materially.

One additional detail worth understanding is that GLDM is structured as a grantor trust. A grantor trust is a special type of ETF structure where shareholders are treated as direct proportional owners of the underlying assets. In this case, that means investors are effectively considered partial owners of the physical gold bullion held by the trust.

From a tax perspective, that means gains are generally taxed similarly to physical precious metals collectibles in taxable accounts, rather than the more favorable long-term capital gains rates. Investors should understand that before buying GLDM, especially in taxable portfolios.

Is GLDM Better Than GLD?

If your goal is long-term buy-and-hold gold exposure, I absolutely think GLDM is superior to GLD. Economically, the two products provide almost identical exposure to physical gold bullion. The major differences are the expense ratio and share price. GLDM simply charges dramatically less while also trading at a lower per-share price, making position sizing easier for smaller investors.

The performance difference becomes surprisingly noticeable over time. Using a 7.89-year backtest from Testfolio.io covering June 26, 2018 through May 18, 2026, a hypothetical investment in GLD would have compounded to an ending value of approximately $35,085 before taxes. GLDM, on the other hand, would have compounded to roughly $35,823 over the same stretch.

At first glance, that difference may not seem dramatic. But scaling up the math changes things quickly. If instead you invested $100,000 over the same period, GLD would have grown to approximately $350,855, whereas GLDM would have ended at roughly $358,238.

That is a difference of more than $7,000 simply from lower fees on essentially identical economic exposure. That is a family vacation. That could cover a used car. For some retirees, that might even represent several months of living expenses.

I think the only time GLD really makes more sense than GLDM is for active options traders. GLD’s options chain is significantly more developed, with tighter spreads, more strike prices, and more expiration dates available. If you are regularly selling covered calls or implementing advanced options strategies, GLD’s liquidity advantages can matter.