Ready to Add Gold? Consider 5 Hypothetical Cores, from Conservative to Aggressive

In Build Your Core with SPDR Portfolio ETFs^TM, We highlighted 5 hypothetical core examples using US equities, international equities and fixed income that can be tailored to clients’ risk and return requirements ranging from conservative to aggressive. Now, we’re introducing the same 5 hypothetical core examples with an allocation to gold as shown in Figure 3.

If a client is more focused on capital growth over the longer term, a portfolio can be tailored to move up the risk spectrum and allocate more to equities, becoming more equity-like, as measured by the beta to the S&P 500^® Index, and less bond-like, as measured by the beta to the Bloomberg Barclays U.S. Aggregate Bond Index.

Equity market fluctuations historically typically have a larger impact on more risk-seeking portfolios, while shifts in the bond market typically impact more risk-averse allocations. The difference is most stark when examining the worst 1-year return periods in Figure 2 above, as more bond sensitive hypothetical portfolios would have experienced less significant drawdowns.

However, the risk and return relationship is generally asymmetrical. The hypothetical Conservative allocation with 19% equities would have had some sensitivity to the stock market, while the hypothetical Aggressive allocation with only 2% bonds would have had nearly no sensitivity to the bond market. This underscores how even slight asset allocation differences may impact risk and return, as shown in Figure 4.

Figure 4: Hypothetical Portfolio Sensitivities to Stocks and Bonds

Figure 5 further illustrates the impact of moving up and down the risk spectrum and how modest adjustments to an allocation may dictate risk sensitivities. An increasing allocation to gold for the more risky hypothetical portfolios would have helped increase risk-adjusted returns in the hypothetical core examples.

Figure 5: 20-Year Risk/Return Profile for Hypothetical Portfolios

Index results do not represent actual ETF results and are for illustrative purposes only. Source: FactSet, for the period from July 1, 1998 through June 30, 2018. Beta is a measure of the volatility of a portfolio in comparison to the benchmark. Worst 1-Year Return is measured for any consecutive 12 month period. Each portfolio is rebalanced annually, without taking into account transaction costs. The returns were achieved by mathematically combining the actual performance of the indexes listed above. Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. Performance returns for periods of less than one year are not annualized.

Index results do not represent actual ETF results and are for illustrative purposes only.

Source: FactSet, for the period from July 1, 1998 through June 30, 2018. The following are the weights for Hypothetical Portfolios without gold. Conservative without Gold represents 10% of the Wilshire 5000 Total Market Index, 10% of the S&P Developed ex-U.S. BMI Index and 80% of the Bloomberg Barclays U.S. Aggregate Bond Index. Moderate-Conservative without Gold represents 21% of the Wilshire 5000 Total Market Index, 19% of the S&P Developed ex-U.S. BMI Index and 60% of the Bloomberg Barclays U.S. Aggregate Bond Index. Moderate without Gold represents 31% of the Wilshire 5000 Total Market Index, 29% of the S&P Developed ex-U.S. BMI Index and 40% of the Bloomberg Barclays U.S. Aggregate Bond Index. Moderate-Aggressive without Gold represents 39% of the Wilshire 5000 Total Market Index, 36% of the S&P Developed ex-U.S. BMI Index and 25% of the Bloomberg Barclays U.S. Aggregate Bond Index. Aggressive without Gold represents 47% of the Wilshire 5000 Total Market Index, 47% of the S&P Developed ex-U.S. BMI Index and 10% of the Bloomberg Barclays U.S. Aggregate Bond Index. Hypothetical Portfolios with gold are represented by Figure 3. Each portfolio is rebalanced annually, without taking into account transaction costs. The returns were achieved by mathematically combining the actual performance of the indexes listed above. Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. Performance returns for periods of less than one year are not annualized.

Control Costs with Low-Cost SPDR Portfolio ETFs and GLDM

Again, as the largest part of your portfolio, the core should never be the most expensive component. So, when you add asset classes to the core to pursue performance or help improve stability, it’s important to ensure your portfolio’s cost profile remains under control.

SPDR Portfolio ETFs, with an average expense ratio of just 6 basis points (bps), cover domestic and international equity and fixed income categories, making it easy to construct relatively cost-efficient customized cores. And, GLDM’s gold ETF industry-low expense ratio of 18 bps makes it relatively cost-effective to further customize cores with gold exposure.

For thoughts on how you can build portfolios that match your clients’ risk/return objectives, check out the five illustrative allocation examples in Figure 6. From

conservative to aggressive allocations, each of these portfolios seeks to enhance diversification by offering varying exposures to gold. And because weighted average expense ratios range from 4.2 to 5.0 bps, you keep more of your potential return.⁵

At State Street Global Advisors, we have a dedicated team of gold strategists that can provide their expertise on how one can consider allocating gold to a portfolio. That’s why we continuously innovate our gold products to meet client needs and market demand.

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State Street Global Advisors One Iron Street, Boston MA 02210.

T: +1 866 787 2257.

The views expressed in this material are the views of the SPDR Gold Strategy and Research Team through the period ended August 31, 2018 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Important Risk Information

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.

Investing involves risk, and you could lose money on an investment in SPDR^® Gold MiniShares^SM Trust (“GLDM^SM”), a series of the World Gold Trust.

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Increase in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable.

Returns on investments in stocks of large US companies could trail the returns on investments in stocks of smaller and mid-sized companies.

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Important Information Relating to SPDR^® Gold MiniShares^SM

Trust (“GLDM^SM”):

The World Gold Trust has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the World Gold Trust has filed with the SEC for more complete information about GLDM and this offering. Please see the GLDM prospectus for a more detailed discussion of the risks of investing in GLDM shares. The GLDM prospectus is available by clicking here. You may get these documents for free by visiting EDGAR on the SEC website at sec.gov or by visiting spdrgoldshares.com. Alternatively, the Trust or any authorized participant will arrange to send you the prospectus if you request it by calling 866.320.4053.

GLDM is not an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and is not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders of GLDM do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.

GLDM shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of GLDM shares relates directly to the value of the gold held by GLDM (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them. GLDM does not generate any income, and as GLDM regularly sells gold to pay for its ongoing expenses, the amount of gold represented by each Share will decline over time to that extent.

MiniShares^SM and GLDM^SM are service marks of WGC USA Asset Management Company, LLC used with the permission of WGC USA Asset Management Company, LLC.

Standard & Poor’s^®, S&P^® and SPDR^® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation’s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties makes any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto.

For more information, please contact the Marketing Agent for GLDM: State Street Global Advisors Funds Distributors, LLC, One Iron Street, Boston, MA, 02210; T: +1 866 320 4053 spdrgoldshares.com.

State Street Global Advisors Funds Distributors, LLC, One Iron Street, Boston, MA 02210.

Distributor: State Street Global Advisors Funds Distributors, LLC, member FINRA, SIPC, an indirect wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates. Certain State Street affiliates provide services and receive fees from the SPDR ETFs.

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