I was not aware of KILO. The bars are held at the Royal Canadian Mint (so this is in fact the same storage as MNT gold). The problem I see though is that KILO is currency hedged. You will really want a non-hedged gold fund, because that's the only thing that can protect you from a CAD collapse scenario.I've been looking into bullion as a complement to bonds in my portfolio (will play more of a defensive role in my portfolio, hence why I'm not picking gold producer companies). I've been reading up on Canadian gold bullion ETFs and wanted to ask about the pros/cons of CGL, MNT and KILO:
I see a lot of chatter about MNT - is there a reason you guys prefer this to, say KILO, which seems to have a lower MER (0.26% to 0.35%)?
KILO might have a non hedged version KILO.B but I can't seem to pull up a ticker for it, so I don't know what to make of it. This might be a promising fund though. They are a relatively new asset manager. I'd be interested in hearing others thoughts on KILO if they know anything about it.
There are no distributions from bullion funds since there are no dividends or interest.
You definitely want un hedged. Imagine the scenario where gold priced in USD is flat (not really rising or falling) but the CAD implodes and loses half of its value. A hedged bullion fund will return 0%. An unhedged bullion fund would return 100% and this is the effect you want.
I see my gold holding as insurance against the domestic currency (CAD) imploding. For the same reason, you should use foreign stock ETFs that are unhedged, such as ZSP or XAW.