Gold & silver
Gold ETF: how a physically backed gold tracker works
What people call a gold ETF is, in Europe, almost always an ETC: an exchange traded commodity. The structure differs from an equity ETF, and that difference defines the risk you take.
- Ticker
- SGLD / 8PSG
- ISIN
- IE00B579F325
- Issuer
- Invesco
- Ongoing charges
- ±0,12% per jaar
- Structure
- Physically backed ETC (allocated bullion), no yield
Figures are indicative and checked periodically. Always verify the ISIN, ongoing charges and index in the issuer's latest KID and factsheet before you invest.
ETF versus ETC and why it matters
A UCITS ETF must diversify across holdings. A single commodity cannot, so gold trackers are issued as debt instruments (ETCs) by a dedicated entity, backed by physical gold.
In a physically backed ETC, allocated bullion sits in a vault, typically in London or Zurich, with a daily published bar list. That limits counterparty risk, but legally it is not fund assets as in a UCITS ETF.
- ETC = debt instrument backed by physical metal
- Allocated bars with a daily bar list
- No UCITS diversification rules, so read the prospectus
Costs and tracking
Ongoing charges on large gold ETCs run roughly 0.12% to 0.25% per year, settled by periodically selling a fraction of the gold, so metal per unit slowly declines. That is normal and visible in the gold ratio per certificate.
Compare that with physical ownership: a one-off premium over spot plus possible vault or insurance costs, but no annual fund charge.
Delivery, currency and spread
Some ETCs allow physical delivery, usually only from large amounts and at significant cost. For most retail investors that is theoretical.
Gold is priced in dollars. A euro-listed ETC still moves with EUR/USD: a weaker dollar can offset a rising gold price in euro terms.
- A euro listing does not remove dollar exposure
- Hedged variants exist at a cost
- Trade while London is open where possible
Why investors hold gold
Gold pays no interest or dividend. The case for holding it is diversification: it often behaves differently from equities and bonds, especially during geopolitical stress or falling real rates.
Allocations of a few per cent up to around ten per cent are common. Beyond that, the portfolio depends heavily on one price with no underlying cash flow.
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Is a gold ETC the same as owning gold?
No. You hold a claim on an entity that owns physical gold. With allocated backing, counterparty risk is small but not zero.
Is there VAT on a gold ETC?
Investment gold is VAT exempt in the EU, physically and through backed ETCs. Tax on gains still differs per country.
What does it cost per year?
Around 0.12% to 0.25% in ongoing charges, settled in the gold amount per certificate.
Gold ETC or gold miners?
An ETC tracks the metal price; miners add company risk and leverage and can deviate strongly from the gold price.
This is information, not investment advice. Past performance says nothing about future returns; you can lose your investment.