Gold ETF Cuts Its Expense Ratio To Compete With GLD And IAU
The VanEck Merk Gold Trust (OUNZ) is one of the lesser known names in the gold ETF space, but it's about to compete with the big boys.
The company announced last week that it is cutting the expense ratio on OUNZ from 0.40% down to 0.25% in an attempt to capture the current precious metals rally.
For comparison's sake, the SPDR Gold Trust (GLD) charges 0.40% and the iShares Gold Trust (IAU) has a fee of 0.25%. GLD and IAU combined manage more than $100 billion in assets. OUNZ manages a comparatively meager $350 million.
Will the move work for VanEck? Possibly, but I wouldn't count on it.
GLD and IAU easily account for the vast majority of the gold ETF market. GLD, in particular, is frequently used as the trading vehicle of those seeking gold exposure and I don't suspect it's going to lose that title anytime soon. IAU may be less familiar to investors, but it's $25 billion asset base shows it's still a major player in the space.
But the ETF industry has become a fee-driven market. Many companies try to compete on price and it has proven to be an effective strategy in some, although not all, cases. BNY Mellon and SoFi, for example, recently launched funds with 0% expense ratios, but neither has managed to attract much in the way of assets.
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