NEW YORK ( TheStreet) -- In recent weeks, BlackRock ( BLK), the company behind iShares Comex Gold ( IAU), has taken dramatic steps to set their physical gold fund apart from its competitors.

Thanks to the advent of exchange-traded funds, owning gold has become as easy as owning traditional bonds and equities. Investors looking for exposure to the yellow metal can play miners using Market Vectors Gold Miners ETF ( GDX) or gold futures contracts using PowerShares DB Gold Fund ( DGL). However, the most popular form of gold ETF remains the physically backed products: SPDR Gold Shares ( GLD), iShares COMEX Gold Trust ( IAU) or ETFS Physical Swiss Gold Shares ( SGOL).

Each of these funds tracks the price of physical gold by maintaining large stockpiles of the metal in designated vaults around the world. Since all three of these products boast identical investment strategies, choosing among them can be a difficult task. On initial examination, the funds tend to vary only by small dissimilarities; SGOL, for instance, features a lower fee of 0.01%, while each ETF stores their metal at different locations. However, IAU's recent changes make it stand out from the crowd.

Launched on Jan. 21, 2005, IAU just barely missed out on being the first mover in the physical gold ETF arena. SPDR Gold Shares ( GLD) launched barely two months prior.

Although the window between GLD and IAU's launch dates is small, it has made an enormous difference for the two funds' popularity and size. Since its launch, GLD has managed to attract more than $50 billion in assets, making it the largest physical gold ETF. Comparatively, IAU boasts only $3.3 billion in assets, while the fledgling SGOL lags behind at less than $600 million in assets.

Historically, IAU has never held the upper hand when it came to costs either. Prior to the second half of 2009, physically backed gold ETFs were equal in terms of expenses, with both IAU and GLD charging investors 40 basis points. However, in September of last year, ETF Securities' SGOL hit the markets with an expense ratio of 0.39%, allowing it to claim the title of least expensive physical gold ETF.

Unable to be considered the first, the largest, or the cheapest of the three gold funds, IAU was often forced to play second fiddle to its competitors. However, in recent weeks the fund has gone through a transformation aimed at elevating the fund to the top of the ranks.

Two dramatic changes have taken place in IAU. First, in mid June, the fund went through a 10-for-1 share split, dramatically decreasing the price of its individual shares. Although it technically costs the same amount of money to buy the same amount of gold, the psychological effect of being able to buy larger baskets of IAU at one time may make the fund more attractive to smaller retail investors.

Following the fund's share split, BlackRock went on to slash the expense ratio by more than a third, dropping IAU's fees to 0.25% from 0.40%. In terms of costs, this officially puts their product a good distance ahead of its rivals.

Now that these changes have been made, it will be up to investors to decide whether or not they will be successful. As evidenced by the monthly flow report issued by the National Stock Exchange, the split did not increase IAU's popularity in June, as both GLD and SGOL beat out IAU in inflows. It remains to be seen how investors will respond to the fee reduction.

Personally, I have long been a fan of gold ETFs and IAU in particular. Even before the alterations, I added the fund to the ETF Action portfolio and have held it since Jan. 2008 for some of my money management clients' portfolios.

Whether IAU ends up stealing market share away from GLD and SGOL is still unclear, but the fund has a decent shot at establishing a stronger hold in the market. However, regardless of IAU's performance, gold still remains an essential element of any well diversified portfolio, especially in today's volatile times.

At the time of publication, Dion Money Management IAU and GDX.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.