Should You Invest in Gold or the S&P 500? It Depends.

Investors often view gold as a hedge against equity market volatility. While the broad-market State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) represents the core of many portfolios by tracking the 500 largest U.S. companies, SPDR Gold Shares (NYSEMKT:GLD) offers a low-correlation alternative to equities, providing higher recent returns and lower volatility focuses solely on the price of gold bullion.

This comparison examines how these two heavyweights differ in cost, risk, and portfolio role.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The SPDR trust is the more affordable option, featuring an expense ratio of 0.09% versus 0.4% for GLD. Because the equity fund holds dividend-paying companies, it provides a 1% yield, whereas the gold fund provides no income payout.

Performance & risk comparison

What's inside

SPDR Gold Shares tracks the price of physical gold bullion by holding the asset in secure vaults. Because it is backed by a physical commodity, its portfolio concentrates 100% of its weight in physical gold bullion rather than shares of various companies. This fund, which was launched in 2004, does not provide a trailing-12-month dividend because it does not hold income-generating securities. It remains the first U.S.-listed ETF backed by a physical asset, offering investors a way to trade gold without the complexities of physical storage.

In contrast, the State Street SPDR S&P 500 ETF Trust holds a diversified basket of 504 holdings. Its largest positions include Nvidia at 8.5%, Apple at 6.9%, and Microsoft at 5%. The fund was launched in 1993 and has a trailing-12-month dividend of $7.38 per share. Its sector exposure is led by technology at 37%, financial services at 12%, and communication services at 11%.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

An S&P 500-tracking exchange-traded fund (ETF) is commonly recommended as an investment that can serve as the foundation of a portfolio. In fact, many investors, including, famously, Warren Buffett have argued that retail investors can build wealth by investing only in a low-cost S&P 500 index fund. At just 0.09%, SPY’s expense ratio is certainly lower than GLD’s 0.4%.