Gold has long been a popular investment choice for those seeking stability and protection against economic uncertainties. At Natural Resource Stocks, we often receive questions about gold-related investment options.
One such option that’s caught the attention of many investors is the iShares Gold Strategy ETF. This exchange-traded fund offers a unique approach to gold investing, combining exposure to gold futures contracts with a portfolio of fixed-income securities.
What Is the iShares Gold Strategy ETF?
Fund Structure and Management
The iShares Gold Strategy ETF (IAUF) offers a unique approach to gold investing. BlackRock, one of the world’s largest asset management firms, manages this fund. IAUF combines gold futures contracts with a portfolio of fixed-income securities, setting it apart from traditional gold ETFs that only track physical gold prices.
As of September 2025, IAUF has net assets of approximately $47.82 million. While smaller than some gold ETFs, it provides sufficient liquidity for most investors. The fund’s expense ratio is 0.25%, which competes well within the commodities-focused ETF category.
Investment Strategy and Objectives
IAUF’s primary objective is to track the Bloomberg Composite Gold Index performance. This index is made up of liquid exchange-traded futures on gold, and iShares Gold Trust which is an investment fund incorporated in the USA. By investing in gold futures (rather than physical gold), IAUF tries to provide returns that closely mirror gold price movements while potentially offering additional yield through its fixed-income holdings.
IAUF is classified as a non-diversified fund, meaning its entire portfolio focuses solely on gold-related investments. This focus can lead to higher volatility compared to more diversified funds.
Historical Performance
IAUF has shown solid performance since its inception, particularly during periods of economic uncertainty. As of September 2025, the fund’s year-to-date return is 15.91%. This figure falls slightly below the category average of 16.90% but still represents a significant gain for investors.
Over a 3-year period, IAUF has yielded a return of 9.83%, outperforming the category average of 8.68%. These results suggest that the fund’s strategy of combining gold futures with fixed-income securities has effectively captured gold’s price movements while potentially providing additional returns.
However, past performance doesn’t guarantee future results. The fund’s performance ties closely to gold prices, which can be volatile and influenced by various factors (such as geopolitical events, inflation rates, and currency fluctuations).
Investor Considerations
Investors considering IAUF should weigh several factors:
- Exposure to Gold: IAUF provides exposure to gold without the need for physical ownership, which can be attractive for those seeking to diversify their portfolios.
- Professional Management: BlackRock’s expertise in managing ETFs can be a significant advantage for investors who want professional oversight of their gold-related investments.
- Potential Hedge: Gold may continue to advance in 2025 despite a stronger dollar and elevated real rate environment, making IAUF a potential tool for risk management in a broader investment strategy.
- Market Risks: The fund’s performance depends heavily on gold prices, which can be unpredictable and subject to rapid changes based on global economic conditions.
As we move forward to examine the advantages of investing in the iShares Gold Strategy ETF, it’s important to consider how these characteristics might align with your investment goals and risk tolerance.
Why Invest in iShares Gold Strategy ETF?
Simplified Gold Exposure
Gold ETFs have become an essential tool for investors looking to gain exposure to the price of gold without the complexities of owning physical bullion. The iShares Gold Strategy ETF (IAUF) offers investors an easy way to add gold to their portfolios without the complexities of physical ownership. Investors don’t need to worry about storage, insurance, or transportation costs (which can be significant for physical gold). This convenience appeals to those who want gold in their investment strategy but prefer not to deal with the logistics of storing and securing physical bullion.
Professional Management and Liquidity
The iShares Gold Trust seeks to reflect generally the performance of the price of gold. BlackRock, the world’s largest asset manager, oversees IAUF. This professional management brings expertise in navigating the complexities of gold futures markets and fixed-income securities. The fund’s trading volume ensures that investors can enter or exit positions with relative ease.
Potential Inflation Protection
Gold has historically served as a hedge against inflation, and IAUF provides a way to potentially benefit from this characteristic. IAUF’s strategy combines gold futures with fixed-income securities to capture gold’s price movements while potentially offering additional yield. This approach could prove particularly attractive in inflationary environments.
It’s worth noting that while gold can protect against inflation, its effectiveness varies depending on economic conditions and market sentiment. Investors should consider IAUF as part of a broader, diversified investment strategy rather than a standalone solution for inflation protection.
Diversification Benefits
IAUF can serve as a valuable diversification tool within an investment portfolio. Gold often has a low correlation with stocks and bonds, which means it can help reduce overall portfolio risk. During times of market volatility or economic uncertainty, gold prices may rise as investors seek safe-haven assets. This potential for negative correlation with traditional asset classes makes IAUF an attractive option for investors looking to balance their portfolios.
As we examine the potential risks and considerations associated with investing in the iShares Gold Strategy ETF, it’s important to weigh these advantages against possible drawbacks to make an informed investment decision.
What Are the Risks of Investing in iShares Gold Strategy ETF?
Gold Price Volatility
The performance of IAUF ties closely to gold prices, which can fluctuate significantly. Various factors influence gold prices, including geopolitical events, currency fluctuations, and changes in interest rates. For example, gold hit a record high as demand for the precious metal remains strong amid global economic uncertainty. However, such rapid price increases often precede sharp declines. Gold ETFs, like all investments, come with risks. While gold is often seen as a safe-haven asset, its price can be volatile in the short term.
Potential Underperformance vs. Physical Gold
IAUF’s strategy of investing in gold futures and fixed-income securities may result in underperformance compared to physical gold or ETFs that directly track gold prices. Futures contracts can suffer from contango or backwardation, which potentially erodes returns over time. Moreover, the fixed-income component of the fund might not always provide the expected yield (especially in low-interest-rate environments).
Expenses and Opportunity Cost
While IAUF’s expense ratio of 0.25% competes well within its category, it still represents an ongoing cost that impacts long-term returns. These fees compound over time and reduce the overall performance of your investment. Investors should compare this to the costs of owning physical gold, which might include storage fees but avoids ongoing management expenses.
Counterparty and Operational Risks
IAUF carries counterparty risks, as its performance depends on the ability of its counterparties to fulfill their obligations. The fund also faces operational risks associated with the management of futures contracts and fixed-income securities. Although BlackRock (a reputable asset manager) oversees IAUF, past incidents in the ETF industry highlight the importance of these risks.
Tax Implications
The IRS treats gold and other precious metals as collectibles for tax purposes. Collectibles have a 28% top federal tax rate for long-term capital gains, which is significantly higher than the rates applied to most other long-term capital gains. This tax treatment can erode returns, particularly for investors in higher tax brackets.
Final Thoughts
The iShares Gold Strategy ETF (IAUF) offers a unique approach to gold investing, combining gold futures exposure with fixed-income securities. This strategy provides investors with potential benefits from gold price movements without the complexities of physical ownership. IAUF’s professional management, competitive expense ratio, and diversification potential make it an attractive option for many investors.
Investors should weigh the risks associated with IAUF carefully. The fund’s performance ties closely to volatile gold prices, which can lead to significant value fluctuations. Additionally, the use of futures contracts may result in underperformance compared to physical gold or ETFs that directly track gold prices.
For investors who seek to make informed decisions about natural resource investments, including gold and other precious metals, Natural Resource Stocks offers comprehensive market analysis and expert insights. Our platform provides the tools and information needed to navigate the complex world of resource investing (helping you make strategic decisions aligned with your investment goals).
