LONDON (Reuters) - The World Gold Council, owner of the world's largest gold-backed exchange traded fund (ETF), is launching a new fund with a cut-price management fee to fend off rivals with lower charges, a source familiar with the matter told Reuters.
The move is a sign that cost competition among gold ETFs is heating up after a price war in the much larger equities ETF sector slashed management fees. Gold ETFs allow buyers to invest in physical gold without having to buy and store the metal.
The council's SPDR Gold Trust (GLD.P), which launched in 2004 and trades using the ticker GLD, dominates the industry but its share of total bullion held by gold-backed funds has slipped below 50 percent from 75 percent at the start of the decade, Reuters data show.
GLD's gold holdings have risen 5 percent since the start of last year while rival iShares Gold Trust (IAU.P), which is run by investment manager BlackRock (BLK.N) with a lower management fee, has grown 47 percent, by far the fastest growth among the five biggest gold ETFs tracked by Reuters.
Other low-fee funds such as Deutsche Asset Management's Xtrackers Physical Gold ETC (XGLD.L) are growing rapidly and others such as GraniteShares (BAR), launched last year, are popping up.
GLD charges a fee of 40 basis points, or 0.4 percent, of the value of an investment, around the higher end of the market, while iShares Gold and Xtrackers take 25 basis points and GraniteShares 20 basis points, near the bottom.
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