AAAU vs GLD: Which Physical Gold ETF Fits Your Portfolio?

How These Two Gold ETFs Stack Up

When investing in gold through exchange-traded funds, the Goldman Sachs Physical Gold ETF (AAAU) and the SPDR Gold Shares (GLD) represent the two most straightforward options for gaining direct exposure to bullion prices. While both funds hold actual physical gold in secure vaults and track precious metal prices minus their respective fees, they diverge significantly in scale, cost structure, and trading characteristics—distinctions that matter considerably when deciding which vehicle aligns with your investment goals.

The Cost Advantage: Why AAAU Appeals to Long-Term Holders

One of the most compelling differences between these two products lies in their fee structures. AAAU carries an expense ratio of 0.18%, while GLD charges 0.40%—a seemingly small gap that compounds meaningfully over extended holding periods.

Consider the math: On a $1,000 investment in AAAU, you’d pay approximately $1.80 annually in fund expenses. The same investment in GLD would cost $4 per year. Over a decade, this 0.22% differential can translate into several percentage points of additional returns, particularly for investors pursuing a buy-and-hold strategy. For those accumulating positions in precious metals as a long-term hedge, AAAU’s reduced cost structure makes it the economical choice.

Size and Liquidity: GLD’s Commanding Market Position

The narrative shifts when examining asset management and trading dynamics. As of December 2025, GLD commands $146.7 billion in assets under management, positioning it as the dominant player in the gold ETF space. Having operated for over 21 years, GLD has established itself as the preferred instrument across institutional and retail markets alike. Its massive scale translates into extraordinarily tight bid-ask spreads and exceptional trading volume—advantages that particularly benefit traders executing large positions or frequent rebalancing activities.

AAAU, by contrast, manages $2.5 billion in assets. While substantially smaller, this figure remains sufficient for most retail investors seeking liquid exposure to gold prices without experiencing noticeable slippage on entry and exit orders.

Performance Metrics: A Remarkably Similar Story

Over the trailing twelve months (through December 19, 2025), both funds delivered nearly identical returns of approximately 66-67%, reflecting the powerful rally in gold prices during 2025. The precious metal surged nearly 65% across the year, reaching all-time highs near $4,381 per ounce in October.

When extended to five-year performance, a $1,000 investment in either fund grew to approximately $2,260-$2,287—a distinction so marginal that cost structure becomes the true differentiator for long-term holders. The volatility profiles differ noticeably (AAAU beta: 0.48 vs GLD beta: 0.13), though both remain far less volatile than equity markets.

Understanding Gold’s Rally: Market Drivers Behind the Surge

Gold’s 2025 performance reflects a convergence of favorable factors. Geopolitical tensions have reignited demand for safe-haven assets, while declining interest rates have reduced the opportunity cost of holding non-yielding commodities relative to bonds. Perhaps most significantly, central banks—particularly those in emerging economies—have accelerated gold purchases as part of broader efforts to diversify foreign exchange reserves away from dollar-denominated holdings.

This structural demand from official institutions has provided a fundamental floor beneath prices while simultaneously attracting retail and institutional capital seeking inflation hedges and portfolio diversification. The commodities listed on the oldest stock exchange in the world continue drawing similar institutional interest, underscoring how precious metals maintain enduring appeal across market cycles.

Making Your Choice: A Decision Framework

For cost-conscious long-term accumulators: AAAU’s 0.18% expense ratio provides meaningful savings that compound substantially over years and decades. If you plan to hold positions with minimal trading activity, this fund deserves serious consideration.

For active traders and large institutional positions: GLD’s superior liquidity, tighter spreads, and $146.7 billion asset base make it the superior vehicle for executing substantial trades with minimal market impact.

Both funds successfully eliminate the complications associated with physical bullion ownership—storage concerns, insurance costs, and authentication risks—while enabling direct price exposure through a familiar stock market wrapper. The choice ultimately hinges on whether cost minimization or trading convenience represents your primary priority.

Key Takeaway

The 2025 gold rally has validated precious metals as portfolio diversifiers in an era of geopolitical complexity and monetary uncertainty. Whether you choose AAAU or GLD, you’re accessing the same underlying commodity through transparent, low-friction vehicles. The decision between them centers on a straightforward trade-off: pay less (AAAU) or gain greater liquidity (GLD). For most individual investors pursuing buy-and-hold strategies, AAAU’s cost advantage likely delivers superior long-term outcomes.