AAAU vs IAUM: Weighing Cost Efficiency in Physical Gold ETFs

Key Takeaways

• Both AAAU and IAUM are physically backed gold ETFs that track the LBMA Gold Price, offering direct bullion exposure without derivatives.
• IAUM carries a lower fee — 0.09% gross (0.07% net after waiver) versus AAAU's 0.18% — a structural cost advantage that compounds for long-term holders.
• Both funds are grantor trusts holding a single asset (allocated gold bullion), so neither provides equity diversification or dividend income.
• IAUM commands greater scale with roughly twice the assets under management, while AAAU offers a longer operating history (2018 versus 2021).
• Tickeron AI Verdict: IAUM is favored for its identical exposure delivered at a meaningfully lower cost and with superior liquidity scale.

Introduction

Gold has regained attention among investors dealing with ongoing inflation pressures, currency concerns, and geopolitical risks. In this setting, the choice of investment vehicle can make a difference, since two funds may follow the same metal yet vary in expenses and setup. The Goldman Sachs Physical Gold ETF (AAAU) and the iShares Gold Trust Micro (IAUM) stand as direct options in the physically backed gold ETF space. Both aim to track the spot price of gold, so this comparison centers on structural details, costs, and liquidity rather than differing strategies. I also checked this using Tickeron’s AI Screener to see how the funds line up against peers in the category.

Goldman Sachs Physical Gold ETF (AAAU) Overview

AAAU operates as a passive, physically backed exchange-traded fund structured as a grantor trust. Its goal is to reflect the price of gold, minus expenses, through gold bars that meet London Good Delivery standards and are stored in secure vaults in the United Kingdom. The fund avoids futures, swaps, or other synthetic tools.

At its core, the fund holds essentially one asset: 100% allocated physical gold bullion. It shows no meaningful sector allocation outside precious metals and carries no equity or fixed-income exposure. The custodian is JPMorgan Chase Bank, N.A., and shares represent a fractional undivided beneficial interest in the trust's net assets.

Launched in July 2018, AAAU has an expense ratio of 0.18% and manages around $3 billion in assets under management. Since gold produces no cash flow, the fund makes no distributions; the amount of gold represented per share declines slowly as bullion is sold to cover fees and costs.

iShares Gold Trust Micro (IAUM) Overview

IAUM represents BlackRock’s lower-cost approach in the physical gold ETF market. Like AAAU, it is a passive grantor trust aimed at reflecting the price of gold. Its holdings consist mainly of physical gold stored by a custodian in secure, segregated, allocated form, including fractional bars.

The fund follows the LBMA Gold Price and maintains essentially a single position in physical gold bullion, with no equity, bond, or derivative exposure. Launched in June 2021, it has grown to roughly $7 billion in AUM, positioning it among the larger and more liquid vehicles in this segment.

Its standout feature is the cost structure. IAUM charges a gross sponsor fee of 0.09%, with a voluntary waiver bringing the net fee to about 0.07% through June 30, 2027. This places it among the lowest-cost gold exchange-traded products available, which matters when identical exposure makes fee differences the main factor in relative returns over time.

Industry and Thematic Backdrop

Both funds sit in the precious metals commodity area, where the main theme remains demand for gold as a store of value and inflation hedge. Recent cycles have been influenced by central-bank purchases, real interest rate expectations, U.S. dollar movements, and geopolitical factors. Because gold typically yields nothing, its opportunity cost increases when real rates rise and decreases when they fall, so monetary policy views play a key role in performance.

Regulatory and structural points also come into play. Physically backed gold ETFs set up as grantor trusts are not registered investment companies under the Investment Company Act of 1940 and are not commodity pools under the Commodity Exchange Act. This setup aims to provide shareholders with direct, undivided ownership of allocated bullion, which affects tax treatment and custody compared with synthetic or futures-based products.

Performance and Positioning Comparison

Since AAAU and IAUM follow the same benchmark, their gross performance profiles remain nearly identical over recent periods. Relative positioning therefore depends more on cost efficiency, tracking accuracy, and liquidity. Over the trailing one- and three-year periods, both have produced comparable NAV returns that closely track the LBMA Gold Price.

The main practical difference lies in fee impact. An expense ratio of 0.18% versus a net 0.07% fee may seem small annually, yet it adds up over longer holding periods. IAUM’s larger AUM and trading volume also tend to support tighter bid-ask spreads and smoother execution, while AAAU’s longer history provides a more extended record to review. Volatility levels in both funds stay essentially the same, driven by the shared bullion exposure rather than any difference in strategy.

Tickeron AI Verdict

Based on the observable structural factors, Tickeron’s AI would likely favor IAUM in this comparison. Both deliver essentially the same gold exposure, which moves the decision toward cost efficiency, scale, and liquidity. IAUM’s net fee of roughly 0.07% is less than half of AAAU’s 0.18%, and its larger asset base supports efficient trading and tighter spreads. While AAAU’s longer track record remains a valid point, the combination of lower cost, greater scale, and identical benchmark tracking gives IAUM the edge for most long-term holders. This view reflects relative structural efficiency and is not a personalized recommendation.

Using Tickeron’s AI Tools for ETF Analysis

In my own research process, I often turn to Tickeron’s AI Screener to quickly filter and compare ETFs like these based on fees, AUM, and performance metrics. It helps surface structural differences efficiently without manual effort. I’ve found it particularly useful for spotting cost advantages that matter over multi-year horizons.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

Disclaimers and Limitations

Contributor

Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.

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