ETF Prime: Mercer Unpacks Rise of Gold, International ETFs

Gold is one of the strongest-performing segments of the market year to date. The SPDR Gold Shares (GLD B) is up around 19% year to date, while the S&P 500 is down more than 4%. Nearly $12 billion in net flows has already gone into the physical gold ETF category this year, with GLD alone taking in about half of those flows.

“There’s a lot of unease and not a lot of confidence,” Mercer said, describing current investor sentiment. “While we’re still seeing inflows into a lot of the major [equity index ETFs], we’re also seeing a lot of inflows and price performance in gold.”

Gold ETFs allow investors access to a safe haven asset in a highly liquid way. Gold can serve as a hedge in portfolios due to its role as an uncorrelated asset. 

Despite recent performance, some investors are still critical of investing in gold — believing it doesn’t have much to offer.  

However, gold is used as jewelry and as a component in material items. “There are values ascribed to it. It gets a little bit more interest than other forms of metal,” Mercer said. “I’m not sitting here storing aluminum bars at home.”

It’s hard to discuss gold in 2025 without the conversation drifting to digital gold, or bitcoin. While gold has had a strong start to 2025, bitcoin has struggled. The Bitwise Bitcoin ETF Trust (BITB ) is down about 12% year to date. BITB is up around 16% over a one-year period, but GLD is still outperforming BITB by nearly 25 basis points over that one-year period.

Mercer pointed out that looking at the one-year performance for BITB may be misleading, however, as there was a run-up in the price of bitcoin prior to that. 

Using the iShares Core MSCI EAFE ETF (IEFA A) and the iShares Core MSCI Emerging Markets ETF (IEMG A) as proxies for broad international exposure, IEFA is up around 7% and IEMG is up around 3% year to date. To put the performance of international ETFs into context, as a reminder, the S&P 500 is down more than 4% during the same period.

“We’ve been in just this incredible bull market for U.S. equities overall since 2022. Internationally, everybody has wanted more of a slice of the U.S. pie,” Mercer said.

Sentiment has shifted, however, as now investors are questioning that stance for several reasons, he added. U.S. equities look challenged based on valuations, U.S. government debt, and headwinds facing U.S. companies due to tariffs and, more broadly, isolationist policy.

As investors look abroad, a few funds that stand out include the KraneShares CSI China Internet ETF (KWEB B) and the Global X China Robotics and AI ETF. The KraneShares and Global X ETFs are up around 21% and 8%, respectively, year to date. 

“It’s not a complete rising tide over there: Where you’re investing matters. But valuations are still relatively at a discount compared to U.S. peers,” Mercer explained.

Another interest category is non-U.S. real estate plays, according to Mercer. International real estate looks undervalued on a relative basis, from both a valuation and price per square foot perspectives. 

“I think similar to how people are looking at bitcoin and gold, I think people are looking at non-U.S. as increasingly part of a hedge,” he noted. “A lot of the world is zigging when the U.S. is zagging right now.”

Myers and Geraci offered insight into ETF-of-the-Year nominees, as well as other categories for the 2025 industry awards ceremony. 

Nominees for ETF of the Year include the GraniteShares 2x Long NVDA Daily ETF (NVDL B+), the iShares Bitcoin Trust ETF (IBIT ), the Janus Henderson AAA CLO ETF (JAAA ), the Range Nuclear Renaissance Index ETF (NUKZ ), and the Vanguard S&P 500 ETF (VOO A).

“I think that the category really shows a commentary of what happened the previous year in the world of ETFs,” Myers said.

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