The SPDR Gold Shares (GLD) and the iShares TIPS Bond ETF (TIP) are both among the Top 100 ETFs. GLD is a SPDR State Street Global Advisors N/A fund and TIP is a iShares Inflation-Protected Bond fund. So, what’s the difference between GLD and TIP? And which fund is better?
The expense ratio of GLD is 0.21 percentage points higher than TIP’s (0.4% vs. 0.19%). GLD also has a high exposure to the technology sector while TIP is mostly comprised of AAA bonds. Overall, GLD has provided higher returns than TIP over the past ten years.
In this article, we’ll compare GLD vs. TIP. We’ll look at portfolio growth and risk metrics, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss GLD’s and TIP’s fund composition, holdings, and performance and examine how these affect their overall returns.
|Name||SPDR Gold Shares||iShares TIPS Bond ETF|
|Issuer||SPDR State Street Global Advisors||iShares|
The SPDR Gold Shares (GLD) is a N/A fund that is issued by SPDR State Street Global Advisors. It currently has 59.26B total assets under management and has yielded an average annual return of 5.81% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.4%.
The iShares TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.19%.
GLD’s dividend yield is 1.87% lower than that of TIP (0.0% vs. 1.87%). Also, GLD yielded on average 1.73% more per year over the past decade (5.81% vs. 4.07%). The expense ratio of GLD is 0.21 percentage points higher than TIP’s (0.4% vs. 0.19%).
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GLD’s Top Holdings are Gold Trust, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the GLD’s holdings at 0% and 0%.
|TIP Bond Sectors||Weight|
TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The SPDR Gold Shares (GLD) has a Beta of 0.48 with a Treynor Ratio of 1.21 and a Mean Return of 0.21. Its Alpha is 3.91 while GLD’s Sharpe Ratio is 0.12. Furthermore, the fund has a Standard Deviation of 16.58 and a R-squared of 16.21.
The iShares TIPS Bond ETF (TIP) has a Alpha of -0.58 with a R-squared of 66.57 and a Sharpe Ratio of 0.62. Its Treynor Ratio is 2.24 while TIP’s Beta is 1.18. Furthermore, the fund has a Standard Deviation of 4.33 and a Mean Return of 0.28.
GLD’s Mean Return is 0.07 points lower than that of TIP and its R-squared is 50.36 points lower. With a Standard Deviation of 16.58, GLD is slightly more volatile than TIP. The Alpha and Beta of GLD are 4.49 points higher and 0.70 points lower than TIP’s Alpha and Beta.
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GLD had its best year in 2010 with an annual return of 27.25%. GLD’s worst year over the past decade yielded -28.09% and occurred in 2013. In most years the SPDR Gold Shares provided moderate returns such as in 2012, 2016, and 2011 where annual returns amounted to 5.26%, 8.69%, and 11.2% respectively.
The year 2011 was the strongest year for TIP, returning 13.4% on an annual basis. The poorest year for TIP in the last ten years was 2013, with a yield of -8.65%. Most years the iShares TIPS Bond ETF has given investors modest returns, such as in 2014, 2016, and 2010, when gains were 3.49%, 4.56%, and 6.1% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in GLD would have resulted in a final balance of $16,395. This is a profit of $6,395 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.81%.
With a $10,000 investment in TIP, the end total would have been $15,229. This equates to a $5,229 profit over 11 years and a compound annual growth rate (CAGR) of 4.07%.
GLD’s CAGR is 1.73 percentage points higher than that of TIP and as a result, would have yielded $1,166 more on a $10,000 investment. Thus, GLD outperformed TIP by 1.73% annually.
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