Run for the Gold!! Which one though?

Question

There are many gold based ETFs, let's take GLD and IAN for this example.

• GLD trades approximately at $160
• IAN approximately at $16

If you compare the performances of the two in the past weeks, months, or even starting 10 years ago you'll notice that they've always performed equally. It often looks like a single line in charts.

Assuming equal expenses and fees, what are the implication of buying 10 units of GLD ($1,600 total) versus buying 100 units of IAU ($1,600 total)?

If there are no differences as I think, what's the point of buying GLD since IAU has lower expenses (0.4% vs 0.25%)??

I noticed this in other Index based ETFs and Mutual Funds. Many times the only difference are expenses only and I don't understand how the more expensive security can even exist in the first place..

Answer 1

An IAU share represents a smaller chunk of gold than a GLD share.

GLD used to have a higher volume and better spread than IAU. These days I believe they are about the same.

Answer 2

Both ETF's can exist because there is a lot of duplication in the mutual fund market, and some folks may like dealing with one company more than another one.

In addition, it's always possible the fund with the higher expenses came first, and if the difference is slight (15 basis points in this case) The expenses to buy one and sell the other (and potentially pay taxes and give up return on that portion of the money) may be much greater than you would save by moving from one to the other.