GLDM - 0.18 exp. ratio 'Gold minishares'

[portfolyness]

Between GLDM, IAUF, and AAAU it seems a number of different gold products are getting wheeled out to help get money into gold again. Noticed this today http://spdrgoldshares.com/media/GLD/fil ... mation.pdf - apparently GLDM got listed yesterday (Jun 26th)

Seems like an interesting alternative to IAU. If I'm understanding things right so far there's:

GLDM - 0.18 exp. ratio, still reading to see what the catches are.
IAU - 0.25 sponsor fee - is this calculated the same as the expense ratio?
GLD - 0.4 exp. ratio
SGOL - 0.39 exp. ratio
PHYS - 0.46 exp. ratio
IAUF - 0.31 exp ratio - fairly new, really uncertain about it's 25% allocation though.
AAAU - new, not listed yet.

Yes I know there's differences in how whether the gold is allocated/unallocated/allows for delivery.

[dualstow]

A couple of these are brand new to me. Thank you.

[boglerdude]

Id pay a premium to be able to convert to coins that I could pick up locally

[ochotona]

Hey Sophie, GLDM has shown up at TD Ameritrade as a fee-free ETF !!! Now we can buy it easily in our Lively HSA in small bites!

[sophie]

No way that's AWESOME!!!!!!

Now all I have to pay fees for is VTI and VBR. I like SPTL for bonds, but I don't like any of their free stock ETF offerings.

[Xan]

No way that's AWESOME!!!!!!

Now all I have to pay fees for is VTI and VBR. I like SPTL for bonds, but I don't like any of their free stock ETF offerings.

What don't you like about SPTM, for example?

[ochotona]

No way that's AWESOME!!!!!!

Now all I have to pay fees for is VTI and VBR. I like SPTL for bonds, but I don't like any of their free stock ETF offerings.

What don't you like about SPTM, for example?

When I have my fill of GLDM in TD Ameritrade, my plan is to go get some SPLG, it tracks the S&P500 pretty well

[stuper1]

What's the difference between GLD and GLDM?

[Kbg]

Good question...mine too. I read an article about them and was kinda surprised at the result. It is the same trust structure and issuing company as GLD. Purportedly the only difference is the fee and the share size basis. It is expected that GLD will remain popular with institutional investors where liquidity costs can be much higher than fees while GLDM is aimed specially at the retail market.

In sum, if you are looking for gold exposure via an ETF this one is a no brainer. Personally, sales gimmicks aside, I believe there is no actual substantive difference amongst the various gold ETFs.

[stuper1]

Good question...mine too. I read an article about them and was kinda surprised at the result. It is the same trust structure and issuing company as GLD. Purportedly the only difference is the fee and the share size basis. It is expected that GLD will remain popular with institutional investors where liquidity costs can be much higher than fees while GLDM is aimed specially at the retail market.

In sum, if you are looking for gold exposure via an ETF this one is a no brainer. Personally, sales gimmicks aside, I believe there is no actual substantive difference amongst the various gold ETFs.

When you say "liquidity costs", does than mean the bid-ask spread on the ETF?

[Kbg]

When you say "liquidity costs", does than mean the bid-ask spread on the ETF?

No. It means they buy (sell) so much it moves the price...small historical factoid: this is one of the primary reasons why the market cap index was invented.

[eufo]

Ahh, finally a commission-free way to invest in paper gold with my Roth at TDA! A little late for me, but maybe I'll buy some anyway. Thanks for posting this.

[Kbg]

Speaking of commission free...M1 Financial is looking very good to me as a brokerage option. Check out their "How We Trade" pdf. Commission free, fractional shares, dividend reinvesting, 1.35 margin if you want it at a very competitive (though not the best) rate and a very cool way to do sub portfolios within larger portfolios.

[whatchamacallit]

Speaking of commission free...M1 Financial is looking very good to me as a brokerage option. Check out their "How We Trade" pdf. Commission free, fractional shares, dividend reinvesting, 1.35 margin if you want it at a very competitive (though not the best) rate and a very cool way to do sub portfolios within larger portfolios.

1.35 margin? Isn't it 3.75 ?
https://www.m1finance.com/how-it-works/borrow

[dualstow]

No mutual funds, though. That’s how I do my fractional shares.

[Kbg]

x1.35 leverage

with regard to Mutual Funds, never ever in a taxable account if there is an equivalent ETF version. MFs can not shelter capital gains due to normal trading/portfolio adjustments etc., ETFs can.

[dualstow]

x1.35 leverage

with regard to Mutual Funds, never ever in a taxable account if there is an equivalent ETF version. MFs can not shelter capital gains due to normal trading/portfolio adjustments etc., ETFs can.

You mean capital gains from distributions? I guess mine aren't big enough to generate taxes, b/c I don't pay taxes on those.
And, I'm just asking here- not trying to nitpick - isn't something like M1 for people with smaller accounts? Fractional (individual stock) shares. Accounts that can be started with $500. If you have a large enough account that you have to consider taxes on capital gains, wouldn't you want Vanguard?

Because I don't pay significant taxes on capital gains, I'm not aware of the sheltering via an ETF which you wrote above. Are you sure? I mean all these 10-million-dollar bogleheads are obsessed with taxes, and they own VTSAX, not VTI. That is, admiral shares, not the ETF. Are they missing something?

[Kbg]

I'm hurt fella's truly...calling me a bold face liar.

Google away on this issue, tis a well known fact. Here is one of many articles on the issue.

https://www.fidelity.com/learning-cente ... efficiency

If I was a Boglehead I'm sure I'd be nagging you more about "Well, ETFs are bad because they are so easy to trade that people will do stupid stuff."

Where there are three like kind Vanguard ETF/mutual funds (e.g. regular vs. Admiral shares vs. the ETF version) IDRC ever seeing the ETF version that doesn't have the same expense ratio as the Admirals shares. And why is that? Cuz all the small fry trading is a non-event for the ETF as a whole.

[Cortopassi]

I wonder about GLDM vs. GLD's bid/ask spread. If it is even a penny more on GLDM vs. GLD, because it is more thinly traded, and you have to buy 10x the number of shares, here's what you get:

Hypothetical 200oz (@$1250 is $250k value) in PP, need 2000 shares GLD or 20,000 shares GLDM.

.01 spread on 2000 shares is $20
.02 spread on 20,000 shares is $400

This is an added .008% fee on GLD, and 0.16% on GLDM. Trade in and out a lot and the lower fee will be more than eaten up by the # of shares/spread. Even if the spread is the same, you will always spend 10x more on the bid/ask for GLDM.

[Kbg]

I wonder about GLDM vs. GLD's bid/ask spread. If it is even a penny more on GLDM vs. GLD, because it is more thinly traded, and you have to buy 10x the number of shares, here's what you get:

Hypothetical 200oz (@$1250 is $250k value) in PP, need 2000 shares GLD or 20,000 shares GLDM.

.01 spread on 2000 shares is $20
.02 spread on 20,000 shares is $400

This is an added .008% fee on GLD, and 0.16% on GLDM. Trade in and out a lot and the lower fee will be more than eaten up by the # of shares/spread. Even if the spread is the same, you will always spend 10x more on the bid/ask for GLDM.

So you are saying that GLDM is not a good deal, even with the lower expense ratio?

Corto did a nice job of capturing the spread and shares costs. To pile on to his analysis, a brokerage that charges flat fee vs. per share is also going to make a cost difference. However, I wish he would have added the next step: .18% vs. .4% annual management fee holding costs. GLDM $450 vs. GLD $1000...and this is the gift that "keeps on giving" for as long as you hold the fund.

So the real take away is: "it depends."

Assuming our basic context is the PP, which means buy and hold with infrequent rebalancing, GLDM is probably still the better bet in the vast majority of retail circumstances (e.g. us). If one wanted to get fancy schmancy, there may be a split where the bulk is in GLDM with an estimated rebalance element/percentage in GLD, but that would be some very specific individual circumstances math to do.

Speaking of specific circumstances, several have mentioned they are sitting on losses as they've been holding this stinky stuff since 2011. After doing the math (annual fees, commissions, spreads etc.), it may be worth cashing out GLD, take the loss for tax purposes, wait the required time to avoid the wash sale rule and slide in to GLDM.

Having generally spoke the praises of GLDM's lower costs, personally I will be waiting a while and keeping an eye on volume. When it begins to get healthy I'll consider investing then. (Note: I just checked stockcharts.com based on the previous sentence and volume was 1M shares traded today! The thing has only been on the market for 9 days...I'm thinking the ETF is being well received)

[ochotona]

And always use limit orders, even more so with thinly traded ETFs with a significant spread. Go fishing for a better price.

[Cortopassi]

I wonder about GLDM vs. GLD's bid/ask spread. If it is even a penny more on GLDM vs. GLD, because it is more thinly traded, and you have to buy 10x the number of shares, here's what you get:

Hypothetical 200oz (@$1250 is $250k value) in PP, need 2000 shares GLD or 20,000 shares GLDM.

.01 spread on 2000 shares is $20
.02 spread on 20,000 shares is $400

This is an added .008% fee on GLD, and 0.16% on GLDM. Trade in and out a lot and the lower fee will be more than eaten up by the # of shares/spread. Even if the spread is the same, you will always spend 10x more on the bid/ask for GLDM.

So you are saying that GLDM is not a good deal, even with the lower expense ratio?

I think kbg sums it up nicely, it depends, but for most ppers, who buy and hold it is better long term.

If anyone buys into it, I would be interested to know what the spread is when you bought.

[dualstow]

I'm hurt fella's truly...calling me a bold face liar.

Google away on this issue, tis a well known fact. Here is one of many articles on the issue.

https://www.fidelity.com/learning-cente ... efficiency

If I was a Boglehead I'm sure I'd be nagging you more about "Well, ETFs are bad because they are so easy to trade that people will do stupid stuff."

Where there are three like kind Vanguard ETF/mutual funds (e.g. regular vs. Admiral shares vs. the ETF version) IDRC ever seeing the ETF version that doesn't have the same expense ratio as the Admirals shares. And why is that? Cuz all the small fry trading is a non-event for the ETF as a whole.

Huh. I learned something new today.
I wonder if the tax-managed version of mutual funds has yet another strategy.

[Kbg]

Speaking of specific circumstances, several have mentioned they are sitting on losses as they've been holding this stinky stuff since 2011. After doing the math (annual fees, commissions, spreads etc.), it may be worth cashing out GLD, take the loss for tax purpose, wait the required time to avoid the wash sale rule and slide in to GLD.

Did you mean "slide in to GLDM?"

Yes, sorry for the typo.

[Kbg]

I'm hurt fella's truly...calling me a bold face liar.

Google away on this issue, tis a well known fact. Here is one of many articles on the issue.

https://www.fidelity.com/learning-cente ... efficiency

If I was a Boglehead I'm sure I'd be nagging you more about "Well, ETFs are bad because they are so easy to trade that people will do stupid stuff."

Where there are three like kind Vanguard ETF/mutual funds (e.g. regular vs. Admiral shares vs. the ETF version) IDRC ever seeing the ETF version that doesn't have the same expense ratio as the Admirals shares. And why is that? Cuz all the small fry trading is a non-event for the ETF as a whole.

Huh. I learned something new today.
I wonder if the tax-managed version of mutual funds has yet another strategy.

No. Tax managed MFs are actually tax managed in that they tweak their bond allocations toward munis or other tax advantaged bonds and engage in tax loss harvesting and other stock trading strategies to minimize gains distributions. By contrast, the ETF advantage is structural. Side note...I believe the SEC has or is very close to approving a change to the ETF rules that opens up what can be ETF’d and there are many predictions that MF outflows will increase even more.