Top 5 gold funds to consider for buying in Stocks and Shares ISA or SIPP

Exchange-traded commodities (ETC) are investment vehicles that allow investors to gain exposure to commodities — such as gold — without directly purchasing physical assets or investing in futures contracts. ETCs are traded on stock exchanges, similar to shares and exchange-traded funds (ETFs), meaning they can be bought in most stocks and shares ISAs or SIPPS.

Invesco Physical Gold ETC

What it does: Aims to track the spot price of gold, backed by physical gold bars held by JPMorgan in secure vaults.

By Gordon Best. THE Invesco Physical Gold ETC stands out as a major player in the precious metals market, boasting £13 billion in assets. It offers investors a very simple way to gain exposure to gold, which has historically been a safe haven during periods of negative market performance. With a competitive expense ratio of 0.12%, it provides an economical entry into remarkable performance, where investors have achieved a robust return of 23.77% last year and 49.18% over five years.

However, it is worth being aware of the inherent risks. The price of gold can be quite volatile. The fund has seen a maximum decline of 41.78% since its inception, highlighting the potential for significant declines during market turbulence. With eyes on the US elections and the expected reduction in interest rates in many countries in the coming months, there is no shortage of catalysts. Despite these challenges, I think it remains an attractive option for those looking to diversify their portfolio.

Gordon Best owns shares of JPMorgan Chase & Co.

iShares Gold Producers ETF

What it does: Its objective is to monitor the performance of an index of companies related to gold exploration and production.

By Mark David Hartley. iShares Gold Producers ETF (LSE: SPGP) is a UK listed fund that gives shareholders exposure to 61 companies in the global gold industry. Key holdings include Newmont Corp., Barrick Gold, Agnico Eagle Mines and Wheaton Precious Metals. The fund’s benchmark index is the S&P Commodity Producers Gold Index. The ETF gives additional exposure to the broader market for those who have already invested in physical gold.

It has a price-to-earnings (P/E) ratio of 24 and a price-to-book ratio (P/B) of 2.1. The standard deviation is quite high, 31.13%, reflecting its high volatility. The total expense ratio is 0.55%, slightly below the average for gold ETFs. The price has risen 25.3% this year, slightly below the SPDR Gold Trustwhich closely follows the price of physical gold. As it is more volatile than gold, it can result in better returns, but with the risk of greater losses.

Mark David Hartley does not own shares in any of the companies mentioned.

iShares Physical Gold ETC

What it does: iShares Physical Gold ETC tracks the spot price of gold.

By Paul Summers. Having some exposure to gold is a great way to spread risk within a portfolio, in my opinion. However, the problem with buying an ETF full of miners is that it behaves more like a stock fund than a fund in tune with the price of the shiny stuff. This could mean a rollercoaster ride for investors.

For this reason, my choice would be iShares Physical Gold ETC (LSE: SGLN). At just 0.12%, this ETC is one of the cheapest on the market. It is also one of the biggest. As I type, the price has risen almost 50% in the last five years.

That’s not to say it won’t go through periods of unpopularity, such as when appetite for flashy growth stocks increases among investors.

On the other hand, it might just help preserve wealth when the next market crash occurs.

Paul Summers has no position in iShares Physical Gold ETC

VanEck Junior Gold Miners UCITS ETF

What it does: The VanEck Junior Gold Miners UCITS ETF holds shares in 84 small mining companies around the world.

By Royston Wild. Instead of simply investing in an ETF that tracks the price of gold, you can profit from the rising price of gold by purchasing a fund that holds shares in gold mining companies.

ETFs that invest in world-class miners like VanEck Gold Miners UCITS ETF are extremely popular. Investors looking for a better return may also want to check out the VanEck Junior Gold Miners UCITS ETF (LSE:GDXJ).

As its name suggests, this fund invests in small companies that are in the initial phase of their growth cycle. They have the potential to increase in value as they grow their operations. Such businesses could also become acquisition targets for large gold producers.

Some of the biggest holdings here include Kinross Gold, Álamos Gold and Pan-American Silver. About 43% of the fund is locked in its top 10 holdings.

Investing in junior miners represents a greater risk than gaining exposure to more established operators. These companies often have limited cash reserves, while exploration projects also have a low success rate.

But for investors with a greater appetite for risk, this could be a more profitable way to consider playing the price of gold.

Royston Wild does not hold any of the financial securities described above.

VanEck Junior Gold Miners UCITS ETF

What it does: This is the only ETF in Europe that offers exposure to small gold miners.

By James Fox. VanEck Junior Gold Miners UCITS ETF (LSE:GDXJ) is one of the best-performing gold mining ETFs over the past 12 months, with shares up 51% at the time of writing.

The fund invests in shares of smaller gold miners – therefore juniors – some of which are in the early stages of exploration.

And because of their respective origins, stocks held in the fund tend to be more sensitive to underlying gold prices than their mature peers.

In other words, the fund may be more volatile than some of its peers.

So if you are bullish on gold this is a great fund to own, but if you are not it should be avoided as it is more sensitive to downward movements in gold prices.

While many investors may view this ETF as a complement to more traditional gold holdings, the fund offers the potential for much stronger growth driven by the aforementioned sensitivity and the possibility of these smaller companies being premium acquisition targets.

James Fox owns no shares of the VanEck Junior Gold Miners UCITS ETF.