Gold has returned 73% over the past year and 18% year-to-date through February 20, 2026, outpacing most traditional asset classes. For investors asking whether they need dedicated gold exposure, Goldman Sachs Physical Gold ETF (NYSEARCA:AAAU) offers one of the most cost-efficient ways to get it.
What AAAU Is Built to Do
AAAU holds physical gold bullion custodied at the Royal Canadian Mint, meaning each share represents a fractional claim on actual metal. There are no derivatives, no leverage, and no options overlay. The fund’s return engine is straightforward: when gold prices rise, so does the share price. When gold falls, so does the share price. This simplicity is the point. AAAU is designed to give investors direct gold price exposure at a low cost, making it a tool for portfolio diversification, inflation hedging, and safe-haven positioning rather than income generation.
Does It Deliver?
The numbers confirm AAAU tracks gold faithfully. Over the past year, AAAU returned 73.1%, essentially matching SPDR Gold Shares (NYSEARCA:GLD)’s 72.9% over the same period. The marginal difference is largely explained by AAAU’s 0.18% expense ratio, which is meaningfully lower than GLD’s 0.40%, giving AAAU a structural cost advantage over the long run for buy-and-hold investors.
The interest rate environment has shifted meaningfully in gold’s favor. The Federal Reserve has cut rates over the past year, and the 10-year Treasury yield has retreated from its 2025 highs to sit around 4.08% as of February 19. When real yields fall, the opportunity cost of holding non-yielding gold declines — historically one of the strongest tailwinds for gold prices, and a key reason AAAU’s returns have been so strong in this cycle.
The Tradeoffs
AAAU pays no dividend and generates no income. Investors who need yield from every portfolio position will find it a poor fit. Gold also carries no earnings growth or cash flow, meaning its price is driven entirely by sentiment, monetary conditions, and demand dynamics rather than fundamental business value.
Tax treatment is also worth understanding. The IRS classifies physical gold ETFs as collectibles, which means long-term capital gains are taxed at a maximum rate of 28% rather than the standard 20% rate applied to most equity ETFs. For taxable accounts, this is a meaningful cost that can erode after-tax returns versus holding an equivalent equity position.
Gold has historically served as a portfolio diversifier and inflation hedge. Investors should consult a financial advisor to determine whether gold exposure fits their individual circumstances.
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