Choosing Between AAAU and GLD: Which Gold ETF Fits Your Portfolio?

The Gold Rally is Real—But Which ETF Should You Pick?

2025 has been a remarkable year for gold investors. The precious metal has surged nearly 65%, hitting record highs of $4,381.58 per ounce in October. Central banks from emerging markets are aggressively building reserves, geopolitical uncertainty continues to support safe-haven demand, and lower interest rates have made gold more attractive relative to bonds. For those looking to capitalize on this momentum without the complications of physical ownership or individual stock analysis, gold ETFs offer a straightforward solution.

Two standout options dominate the gold ETF space: Goldman Sachs Physical Gold ETF (AAAU) and SPDR Gold Shares (GLD). Both track physical gold bullion and offer direct exposure to gold prices, but they differ significantly in cost structure, scale, and suitability for different investor profiles. Understanding these distinctions is crucial before deploying your capital.

Size Matters: GLD’s Scale Advantage

GLD commands a much larger position in the market, with a massive $146.7 billion in assets under management as of December 2025. This isn’t just a number—it translates directly into practical benefits. The larger asset base means tighter bid-ask spreads, deeper liquidity, and substantially lower transaction costs for anyone executing bulk trades. Over its 21-year operating history, GLD has established itself as the go-to gold ETF for institutional investors and traders who prioritize execution efficiency.

AAAU, by contrast, manages $2.5 billion in assets. While this is a respectable amount for a smaller fund, the difference in scale is stark. For active traders and high-volume investors, GLD’s size advantage delivers measurable savings on every trade.

Cost Efficiency: Where AAAU Wins

If you’re focused on long-term wealth accumulation, AAAU presents a compelling alternative. The fund charges an expense ratio of just 0.18%, compared to GLD’s 0.40%. This 0.22% difference may sound trivial on paper, but compound it over decades and it becomes substantial.

On a $1,000 investment, AAAU costs you only $1.80 annually in management fees, while GLD costs $4.00. For buy-and-hold investors, especially those with significant capital deployed, this efficiency compounds into meaningful outperformance over time. The lower fee structure makes AAAU the more cost-effective choice for passive, long-term gold exposure.

Performance: Nearly Identical Returns

Both ETFs have delivered comparable performance, with 1-year total returns of 66.8% for AAAU and 66.5% for GLD (as of December 19, 2025). Over five years, a $1,000 investment grew to approximately $2,287 in AAAU and $2,262 in GLD—nearly identical wealth creation.

The slight outperformance of AAAU can be partially attributed to its lower fee drag. Both funds hold actual physical gold in secure vaults, ensuring their performance closely mirrors underlying bullion prices without the distortions of leverage or derivatives.

What’s Inside These Funds

Both AAAU and GLD maintain straightforward structures: they hold physical gold bullion stored in secure facilities. Neither employs derivatives, leverage, or complex strategies. This transparency is a key reason gold ETFs have become the preferred vehicle for millions seeking pure commodity exposure.

The primary distinction is operational footprint. GLD, as the larger and longer-established fund, has built an ecosystem of institutional support and market infrastructure. AAAU offers the same underlying exposure with lower costs and less institutional fanfare.

The Investor Takeaway

Your choice between these two fundamentally depends on your investment horizon and trading behavior:

Choose GLD if: You’re an active trader, execute large positions regularly, or prioritize liquidity above all else. The tighter spreads and deeper order book justify the higher fees through lower transaction costs.

Choose AAAU if: You’re a buy-and-hold investor with a multi-year time horizon. The lower expense ratio compounds into superior after-fee returns, making it the more economical choice for patient capital.

Both are legitimate pathways to benefit from gold’s tailwinds. The decision ultimately comes down to whether you value immediate execution efficiency (GLD) or long-term cost efficiency (AAAU). For most long-term investors seeking larger exposure to gold’s upside, the mathematics favor AAAU’s disciplined cost structure.