Analyst Blogs
Paulson & Soros GLD Blunder
August 24, 2012
This may not be what most retail investors want to hear, but these guys are in a much better bargaining position than retail investors as well, considering the scale of their positions.
Heck, Paulson's position alone represents nearly 5 percent of GLD assets, and would constitute more than a third of IAU's current asset tally.
The fact that these guys may be able to negotiate favorable creation or redemption fees from the issuer may be the wizard behind the curtain and may explain why both funds have focused on GLD as opposed to the more cost-effective IAU.
As I said before, these guys are far too smart to not catch something like this.
Still, they illustrate just how easily investors can be distracted by a well-known name brand, which in this case is GLD.
We see it all the time here, whether it be the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) versus the Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) or with the SPDR S&P 500 ETF (NYSEArca: SPY) versus the Vanguard S&P 500 ETF (NYSEArca: VOO).
The bottom line is that it's hard enough to generate the performance needed to outpace inflation and secure retirement.
So, there's no need to further handicap yourself by choosing an unnecessarily expensive ETF, no matter how familiar the name.
Maybe it just takes two billionaires making the same mistake to show how big this mistake can be.
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