A gold ETF (Exchange Traded Fund) may be helpful to diversify your portfolio and hedge it against inflation and currency risks.
Unlike stocks, an alternative investment asset like Gold is often uncorrelated with the stock markets during periods of extreme uncertainty.
This means that when investors flee the financial markets, they may pile into gold, pushing its price up, even though the overall market is in negative territory.
That said, gold is also a volatile asset. You should be careful about over-exposing your portfolio to any security beyond what you are comfortable with from a risk-tolerance perspective.
In addition to purchasing a gold ETF using a brokerage account, other ways to gain exposure includes buying physical gold bullion, gold stocks, and gold derivatives.
In this article, I cover some of the best gold ETFs you can buy in Canada in 2023.
Best Gold ETFs in Canada
Here are the most popular gold ETFs (data as of September):
- Ticker symbol: CGL.TO
- MER: 0.55%
- 5-year average annual return: 8.70%
- Invests in: Gold bullion
- Issuer: BlackRock (iShares)
- Assets under management: $751 million
- Inception date: May 28, 2009
iShares Gold Bullion ETF (CGL) invests directly in physical gold, and it aims to replicate the returns of gold bullion, excluding expenses and fees.
If you are interested in the benefits of holding gold, this ETF is one of the closest replicas you will find in the Canadian market.
CGL is hedged to Canadian dollars, while its unhedged alternative trades under the ticker: CGL-C.
This Canadian gold ETF is eligible for registered and non-registered accounts and has a “medium to high” risk rating.
- Ticker symbol: XGD.TO
- MER: 0.61%
- 5-year average annual return: 10.69%
- Invests in: Gold miners
- Issuer: BlackRock (iShares)
- Assets under management: $979 million
- Inception date: March 23, 2001
iShares S&P/TSX Global Gold Index ETF (XGD) is invested in 10 of the top gold miners, including Barrick Gold, Newmont, Franco Nevada, and Wheaton Precious Metals Corporation.
With over 40 companies in its portfolio, XGD is diversified geographically, with holdings in Canada, the United States, South Africa, and the United Kingdom.
This fund has a “high” risk rating and should ideally not make more than a small portion of your portfolio.
XGD is eligible for registered and non-registered investment accounts and distributes quarterly dividends. It seeks to “provide long-term capital growth by replicating the performance of the S&P/TSX Global Gold Index, net of expenses.”
3. Purpose Gold Bullion Fund
- Ticker symbol: KILO.TO
- MER: 0.23%
- 3-year average annual return: -1.01%
- Invests in: Gold bullion
- Issuer: Purpose ETFs
- Assets under management: $326 million
- Inception date: October 29, 2018
KILO is another Canadian gold ETF that holds gold bullion as its primary investment asset.
As of August 2023, this fund held 126,782 oz of gold bars at the Royal Canadian Mint.
This ETF does not pay out distributions as it is intended to be a direct investment into physical gold bullion.
4. BMO Equal Weight Global Gold Index ETF
- Ticker symbol: ZGD.TO
- MER: 0.60%
- 5-year average annual return: 11.55%
- Invests in: Gold miners
- Issuer: BMO GAM
- Assets under management: $45.85 million
- Inception date: November 14, 2012
ZGD tracks the Soloactive Equal Weight Global Gold Index and aims to replicate its performance (net of expenses) by investing in gold mining equities.
It holds 31 gold mining stocks, including K92 Mining, Wesdome Gold Mines, Endeavour Mining Corp, Dundee Precious Metals, Franco Nevada, B2Gold, Kinross Gold, and more (all equally weighted- approximately).
Its stock holdings are diversified geographically, with the majority in Canada, the U.S., and South Africa, and the remainder in Burkina Faso, Australia, and Turkey.
ZGD is eligible for registered and non-registered investment accounts and carries a “high” risk rating.
Related: ZBAL – BMO Balanced ETF Review
5. Horizons Gold ETF
- Ticker symbol: HUG.TO
- MER: 0.29%
- 5-year average annual return: 6.41%
- Invests in: Gold futures
- Issuer: Horizons ETF
- Assets under management: $31.2 million
- Inception date: June 24, 2009
The Horizons Gold ETF (HUG) aims to replicate the performance of the Soloactive Gold Front Month MD Rolling Futures Index ER, net of fees, distributions, and expenses.
HUG gives investors exposure to physical gold bullion using futures contracts.
It is eligible for registered (RRSP, TFSA, etc.) and non-registered accounts and has a “medium” risk rating.
6. Sprott Physical Gold Trust
- Ticker symbol: PHYS
- MER: 0.41%
- 5-year average annual return: 8.21%
- Invests in: Gold bullion
- Issuer: Sprott
- Assets under management: $6.15 billion
- Inception date: February 24, 2010
PHYS is a closed-end trust that invests directly in gold bars. If you want to hold one of those ‘babies’ in your hands, you can redeem your ETF unit for physical gold bullion (starting at a weight of between 350 and 430 troy ounces).
The custodian for the bullion held by the trust is the Royal Canadian Mint.
While PHYS is not an ETF, it offers similar advantages by offering direct investment in the physical asset and easy buy-and-sell trading via a self-directed brokerage account.
Another way to invest in gold with an option to redeem the physical commodities is through the Royal Canadian Mint – Canadian Gold Reserves (MINT).
MNT is an exchange-traded receipt (ETR).
7. CI First Assets Gold+ Giants Covered Call ETF
- Ticker symbol: CGXF.TO
- MER: 0.71%
- 5-year average annual return: 1.9%
- Invests in: Gold and precious metals companies + covered calls
- Issuer: CI Investments Inc.
- Assets under management: $122 million
- Inception date: June 1, 2011
CGXF is another gold ETF option for investors looking to grow their portfolios and earn some income at the same time.
The fund invests in the stocks of 15 or more of the largest gold and precious metals companies in North America.
It minimizes portfolio risk by using covered call options and has the following top-5 holdings:
- Barrick Gold Corp (7.07%)
- Newmont Corp (6.87%)
- Agnico Eagle Mines Ltd (6.87%)
- B2Gold Corp (6.87%)
- Kinross Gold Corp (6.80%
This fund is eligible for registered and non-registered accounts and makes quarterly distributions when applicable.
8. BMO Junior Gold Index ETF
- Ticker symbol: ZJG.TO
- MER: 0.61%
- 5-year average annual return: 5.97%
- Invests in: Gold miners
- Issuer: BMO GAM
- Assets under management: $59.5 million
- Inception date: January 19, 2010
ZJG invests in junior gold mining stocks in North America and tries to replicate the performance of the Dow Jones North America Select Junior Gold Index (net of fees).
It has a “high” risk rating and holds 38 stocks with the top-5 holdings, including Royal Gold Inc., Kinross Gold, Alamos Gold Inc., B2Gold Inc, and SSR Mining Inc.
9. Harvest Global Gold Giants Index ETF
- Ticker symbol: HGGG.TO
- MER: 0.40%
- Average Annual Return Since Inception: 7.19%
- Invests in: Gold miners
- Issuer: Harvest ETFs
- Assets under management: $15.33 million
- Inception date: January 7, 2019
HGGG is a Canadian gold ETF that invests in 20 of the world’s largest gold mining companies in an equal-weighted portfolio.
This ETF has a 60.1% allocation to Canadian gold mining stocks. The next-highest allocation is 19.2% to Australian stocks.
It pays out an annual dividend distribution to shareholders in December of each year.
Note that the past performance of the Gold ETFs listed does not signify that they will continue to do well or poorly (if applicable) in the future.
Related: Best ETFs in Canada
What are Gold ETFs?
A gold ETF is an exchange-traded fund that either invests in gold (i.e. the commodity/metal) and tracks its price of gold or invests in gold mining companies. Some gold ETFs also invest in gold futures and other derivatives tied to the value of gold.
Gold ETFs trade on the stock exchange similar to stocks and offer investors access to the precious metal without needing to hold the physical gold bullion (coins, bars, or jewellery).
They are more liquid and are easier to buy and sell without needing to worry about the hassles of storage and security.
Also, a gold ETF that invests in a basket of gold stocks provides some diversification and is potentially less volatile than buying individual gold mining companies.
How To Invest in Gold in Canada
You can invest directly or indirectly in gold by purchasing a gold ETF using a discount brokerage account such as Questrade and Wealthsimple Trade.
Questrade:
This brokerage platform supports ETFs, stocks, options, FX, mutual funds, precious metals, and more. It is the best stock trading app in Canada.
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This trading platform offers free ETF ‘buy’ and ‘sell’ trades. It also supports free stock trading and fractional shares.
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Great review, very thorough. Thanks Enoch!