GLD Climbs Back Onto Top 10 ETF List

Gold and GLD regained a bit of that crisis-driven glitter in January.

ETF.com
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

The SPDR Gold Shares (GLD | A-100), the world’s biggest gold ETF, climbed back onto the list of the 10 biggest ETFs in January, as concern about moribund growth in the eurozone brought investors back into the yellow metal.

GLD was last month’s second-most-popular ETF in terms of inflows, and gold prices rose by more than 8 percent, lifting the ETF’s assets under management to more than $30 billion—enough to make GLD the eighth-biggest exchange-traded fund after it ended 2014 in the No. 11 spot, according to data compiled by ETF.com.

“All of the bad news coming out of Europe is what’s driving interest in gold,” said Sumit Roy, an analyst at Hard Assets Investor.com. “We’ve seen high interest coming from institutional investors.” The euro has been losing ground to the dollar for months, and is likely to continue weakening now that the European Central Bank has committed to an aggressive quantitative easing program.

A deeper consideration is that, these days, holding assets in any number of fiat currencies—notably the Swiss franc—implies grappling with a negative yield on assets held in such currencies, Roy says.

That, in turn, means that gold’s often-criticized lack of an “internal rate of return” is not a liability at all, and suggests that if the current period of “secular stagnation” persists, gold will garner a steady public of relatively nonreactive investors keen on preserving capital while not losing money to negative yields.

The more-than-8-percent jump in gold in January brought spot prices to $1,283 a troy ounce. But it’s important to remember that notwithstanding gold’s bounce back in recent weeks, it’s still a third lower than its high at the end of the summer in 2011.

Gold prices reached a cycle high of $1,921 a troy ounce on Sept. 6, 2011—about a month after Standard & Poor’s first-ever downgrade of U.S. sovereign debt—and assets in GLD peaked in August 2011 at $77.5 billion, making it the biggest ETF in the world for two days.

But since that high-water mark, gold prices began to retreat, and investors began pulling out of GLD amid growing signs the U.S. economy was slowly recovering. While Europe’s problems are serious, the dark days of the financial crisis that did so much to fuel gold’s rise are receding into history.

10 Biggest ETFs In January 2015

TickerFundIssuerFlowsAUM ($M)Turnover
SPYSPDR S&P 500SSgA-28,030.52181,725.78714,645.16
IVViShares Core S&P 500BlackRock-1,718.4066,990.3026,236.20
EFAiShares MSCI EAFEBlackRock-368.0353,105.3429,876.88
VTIVanguard Total Stock MarketVanguard1,382.6350,839.918,276.18
VWOVanguard FTSE Emerging MarketsVanguard-611.9245,519.5312,164.31
QQQPowerShares QQQInvesco PowerShares-3,024.2236,606.3290,187.09
EEMiShares MSCI Emerging MarketsBlackRock-969.8931,384.5754,271.93
GLDSPDR GoldSSgA2,039.3630,714.4726,553.44
VNQVanguard REITVanguard499.2229,451.929,239.86
VOOVanguard S&P 500Vanguard1,645.7928,324.4110,118.75



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