ETF v praxi
SGLN — iShares Physical Gold: a breakdown of the physical gold ETC for investors
Key takeaways
- SGLN is an ETC (not a UCITS ETF) — each security is backed by physical gold held in London vaults.
- TER of around 0.12–0.15% per year; gold pays no dividends or interest — total return comes entirely from price change.
- Gold serves as a diversifier, crisis hedge and historical store of value — not a growth asset.
- Historical correlation with equities is low, but the relationship changes and is not guaranteed.
- Recommended allocation is 5–15% of a portfolio as a complement to equities and bonds.
What is SGLN — an ETC, not an ETF
SGLN (iShares Physical Gold ETC) is technically an ETC (Exchange Traded Commodity), not a classic UCITS ETF. The difference lies in the legal structure: an ETC is a debt security backed by physical gold stored in JPMorgan Chase's vaults in London. Each SGLN security represents a share in a specific physical gold bar. No derivatives, no synthetic replication — it is direct gold ownership through the fund.
TER and technical parameters
The TER is approximately 0.12–0.15% per year — verify the current figure on justETF. Gold pays no dividends, so there is no distinction between accumulating and distributing share classes. SGLN is listed on the London Stock Exchange in USD and on other European exchanges in EUR. The product is domiciled in Ireland.
Gold's role in the portfolio
Gold plays a different role in a portfolio from equities or bonds:
- Store of value: historically gold preserves real value across decades and centuries.
- Inflation hedge: in periods of high inflation gold tends to perform well, though the relationship is not mechanical.
- Diversification: the historical correlation of gold with equities is low — it adds portfolio diversification.
- Crisis insurance: during geopolitical tensions or systemic crises the gold price typically rises.
Limitations and risks of gold ETC
Gold also has weaknesses:
- It generates no income — it pays neither interest nor dividends.
- Its value depends entirely on market supply and demand — it can be very volatile in the short term.
- Currency risk: SGLN is denominated in USD — EUR/USD movements affect returns in euros.
Who should hold it and in what allocation
SGLN makes sense as 5–15% of a portfolio for investors looking for diversification beyond equities and bonds. It is natural to combine it with an equity core and optionally with AGGH or IBTA. More on the bond component of a portfolio is in the AGGH breakdown and the IBTA breakdown. How to build a balanced portfolio is covered in how to build your first portfolio.
FAQ
Can I collect physical gold bars from SGLN?
Generally not — retail investors are entitled only to the monetary value on sale. Physical delivery of gold is accessible only to large institutional investors.
Is gold a safe asset?
It depends on the perspective. Gold is historically a store of value, but it can be very volatile in the short term. In a portfolio it plays the role of a diversifier, not a guarantee of stable returns.
How should gains from SGLN be taxed?
For individuals in the Czech Republic the same rules apply as for ETFs: the time test (3 years) or the value test (proceeds up to CZK 100,000) may exempt the gain from tax. Details are in the article on ETF taxation.