The VanEck Merk Gold Trust (OUNZ ), a gold ETF that actually delivers physical gold to investors when they redeem shares, is getting a lower expense ratio.
In a statement issued Tuesday, VanEck said the new fee on OUNZ is 0.25% per year, or $25 on a $10,000 investment, down from 0.40%.
“Gold investing is part of VanEck’s DNA and we’ve long made it a point to be able to offer investors a full menu of opportunities through which they can add exposure to gold bullion and gold miner equities,” said Brandon Rakszawski, Director of ETF Product Development with VanEck, in a statement. “With this fee reduction, OUNZ should be an even more attractive option for those investors seeking gold and for whom the ability to request possession of their gold is an appealing added benefit.”
OUNZ turned six years old in May and has $311.3 million in assets under management.
OUNZ seeks to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold in exchange for those shares. The Trust’s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust’s operations. Each share represents a fractional undivided beneficial interest in the Trust’s net assets. The Trust’s assets consist principally of gold held on the Trust’s behalf in financial institutions for safekeeping.
News of lower fee for OUNZ comes as precious metals are rallying and amid ebullient forecasts for gold.
Per a MarketWatch report, according to Citigroup, the precious metal “is expected to climb to an all-time high in the next six-to-nine months, and there’s a 30% probability it’ll top $2,000 an ounce in the next three-to-five months.”
“Nominal gold prices have already posted fresh records in every other G-10 and major emerging market currency this year,” the Citigroup analysts noted.
Gold certainly had its run during the uncertainty of the Covid-19 pandemic, but as more economies around the world look to return to normal, the precious metal could lose its luster for the rest of 2020. That, however, could pose a buying opportunity for investors looking for gold exposure.
If inflation is to spike as a direct result of these aggressive monetary policies, gold can also benefit as a way to help investors safeguard their purchasing power. Looking at average annualized returns during various inflationary periods, gold showed an annualized return of 8.4% when inflation was below 2% and an annualized return of 16.2% when inflation was above 5%.