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iShares Gold Trust (IAU)

  • Writer: Triplet 59
    Triplet 59
  • Oct 4
  • 5 min read

ISIN: US4642851053

The Origins and Heritage of iShares

Gold has always carried mystique — a tangible measure of trust and permanence in an uncertain world. For centuries, it was the standard of money itself; today, it remains a universal store of value. The iShares Gold Trust (IAU), launched in January 2005 by BlackRock, brought this ancient asset into the modern age, allowing investors to hold gold in a secure, regulated, and easily tradable format.


BlackRock, the world’s largest asset manager, created iShares to simplify access to global markets. The introduction of IAU was revolutionary: it gave institutions, advisers, and individuals alike a way to own physical gold through an exchange-traded trust, bypassing the logistics and costs of vaulting and insuring bullion.


Since its inception, IAU has grown into one of the largest commodity ETFs in existence — a quiet, consistent performer that reflects humanity’s timeless confidence in gold as a hedge against turmoil.


The Investment Vehicle: Structure, Objective, and Style

Behind ISIN US4642851053 lies a U.S.-listed exchange-traded commodity trust. Each share of IAU represents a fractional interest in physical gold bars, held securely in the vaults of JP Morgan Chase Bank, N.A. (the custodian). The gold is audited, serialized, and published for verification — a testament to the transparency demanded by institutional investors.


The objective is straightforward: to track the spot price of gold, less expenses. There’s no leverage, no derivatives, and no active management. Its passive structure mirrors the movements of gold itself, with the net asset value (NAV) tied directly to the daily LBMA Gold Price.


For investors, it provides the essence of gold ownership — security, liquidity, and simplicity — without the burden of physical handling or storage.


Philosophy, Style, and Approach

The iShares Gold Trust embodies BlackRock’s philosophy of access and efficiency. It strips away layers of complexity, enabling gold exposure through a vehicle that trades like a stock but behaves like a vault.

This approach makes IAU ideal for risk management: it typically exhibits low or negative correlation with equities and bonds, acting as a portfolio stabilizer during inflationary, geopolitical, or financial stress periods. Investors don’t buy IAU to chase returns — they buy it to preserve purchasing power.


Its expense ratio of 0.25% positions it among the most cost-efficient physical gold vehicles in the world. Liquidity is deep, spreads are tight, and daily trading volume runs into hundreds of millions of dollars, reflecting its standing as a trusted institutional asset.


Track Record, Performance, and Benchmarks

Since inception, IAU has mirrored the long-term price behavior of gold with remarkable precision. During inflationary surges, monetary policy uncertainty, or crises like 2008 and 2020, it served as a ballast — preserving value when risk assets faltered.


Gold’s historical return profile has been non-linear yet enduring: over 20 years, spot gold has compounded at roughly 8–9% annually, while maintaining defensive strength during drawdowns. IAU’s tracking efficiency means those figures translate closely into shareholder outcomes, minus minimal operational costs.


Benchmarked against equity indices such as the S&P 500, IAU’s role is not to outperform but to offset volatility and reduce portfolio drawdowns — a characteristic prized by wealth managers seeking smoother long-term returns.


Use Cases, Investor Base, and Institutional Appeal

IAU serves a broad investor spectrum:

  • Institutions use it for inflation hedging, liquidity buffers, and portfolio diversification.

  • Advisers use it as a core defensive allocation in diversified portfolios.

  • Individuals use it as a long-term safeguard against currency debasement and economic instability.


Because of its scale, credibility, and simplicity, IAU is often a first choice among gold ETFs for pension funds, family offices, and wealth managers worldwide.


Regions, Availability, and Accessibility on Verī

Through the Verī Platform, the iShares Gold Trust is accessible to investors globally, including Africa and Mauritius, where it forms part of Verī’s international investment universe.


For advisers across the continent, IAU represents an easy way to incorporate hard-asset exposure into client portfolios without operational complications. Custody, pricing, and reporting are integrated seamlessly within the Verī system — offering transparency and institutional control.


Model Portfolio shown on large monitor by financial adviser to his clients.

Integration with Verī Platform and MPS

On the Verī Platform, IAU is globally accessible, offering investors across Africa and beyond a direct path to hold physical gold exposure within a regulated investment account. In the Verī Managed Portfolio Service (MPS), it is often used as a stabilizing asset — an anchor for portfolios aiming to mitigate risk during equity market downturns. Within Verī’s risk-rated models, gold-based ETFs like IAU commonly feature in balanced and conservative portfolios, where the objective is wealth preservation rather than growth. For investors seeking diversification outside of traditional currencies and equities, IAU’s transparency, simplicity, and scale make it an ideal addition.


Costs, Fees, and Efficiency

  • Expense Ratio: 0.25% (as per iShares data)

  • Structure: Physically backed, fully allocated gold bars

  • Liquidity: Among the top gold ETFs globally, trading on NYSE Arca

  • Transparency: Daily holdings published and verified

Compared to alternatives, IAU’s cost efficiency and direct physical backing make it an optimal choice for both tactical and strategic allocations.


Comparative Advantages and Risks

Advantages:

  • Backed by physical gold, stored in high-security vaults

  • Cost-effective and highly liquid

  • Transparent structure with daily published holdings

  • Low correlation to equities and bonds, enhancing diversification

Risks:

  • Gold’s price can fluctuate significantly in short time frames

  • No yield or dividend income

  • Exposure to U.S. dollar strength can affect returns for non-USD investors


How Verī Platform Helps Clarify

At Verī, our mission is simple: to provide access to the entire universe of investments — from income to accumulation strategies, passive to active approaches, low-risk to high-risk instruments, across all asset types, currencies, and regions.When we highlight funds or securities such as this one, it is not an endorsement, recommendation, or promotion of that specific investment. Rather, it is a demonstration of the wide spectrum of options available through the Verī Platform.Our role is to enable access and transparency — giving investors and institutions the ability to see, compare, and evaluate a universe of choices, so they can make their own informed decisions in line with their objectives and responsibilities.

Disclaimer

“This article is provided by Verī strictly for informational purposes only. It is not intended as financial advice, a recommendation, or an endorsement of this investment. The details shared are educational, aimed at broadening knowledge of the investment universe available.”

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