Why IAU reverse split?
4 min read
By Ron Koren, ETF Insider

Why IAU reverse split?

Investors in the iShares Gold Trust (IAU) may have noticed a recent reverse split of the ETF. If you're wondering why IAU underwent a reverse split and what it means for investors, this article aims to provide answers to some frequently asked questions about the reverse split and its implications. Please note that this article does not provide any investment advisory services.

What is a Reverse Split and Why Did IAU Implement It?

A reverse split is a corporate action where a company reduces the number of its outstanding shares while increasing the share price proportionally. In the case of IAU, the reverse split was implemented to maintain compliance with the minimum share price requirements of certain exchanges. By increasing the share price, IAU aimed to ensure continued listing on these exchanges.

How Does the Reverse Split Impact IAU Shareholders?

For existing IAU shareholders, the reverse split means that the number of shares they hold is reduced, but the total value of their investment remains the same. The reverse split does not affect the overall market value of IAU or the percentage ownership of the ETF. However, it may result in a higher share price, which can impact the liquidity and trading dynamics of the ETF.

IAU overlap Why IAU reverse split?IAU overlap Why IAU reverse split?

What Should Investors Consider After the Reverse Split?

Following a reverse split, it is crucial for investors to reassess their investment strategy and understand the potential implications. Some factors to consider include the adjusted share price, trading volumes, bid-ask spreads, and any associated costs or fees. Additionally, investors should review the fund's investment objective, holdings, and performance to ensure it aligns with their investment goals.

Are There Any Risks or limitations with Reverse Splits?

While reverse splits can be a strategic move for companies, they also come with certain risks and limitations. One potential risk is that the increased share price resulting from a reverse split may deter smaller investors or reduce the liquidity of the ETF. Additionally, reverse splits do not guarantee improved long-term performance, and investors should carefully evaluate other factors before making any investment decisions.

The reverse split undertaken by IAU was a corporate action aimed at maintaining compliance with minimum share price requirements on certain exchanges. While the reverse split may result in a higher share price, it does not affect the overall value or percentage ownership of the ETF for existing shareholders. However, investors should consider the potential impact on liquidity and trading dynamics, review the fund's details, and make informed decisions based on their investment goals and risk tolerance.
Disclaimer: This article does not provide any investment advisory services.

In this blog article, we have addressed some frequently asked questions about the reverse split of the iShares Gold Trust (IAU). Understanding the reasons behind reverse splits and their implications can help investors make informed decisions regarding their investments. Always conduct thorough research and consult with a financial professional before making any investment decisions.

Source 1: IAU issuer website
Source 2: Reuters article about IAU

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  • What is the IAU?

    IAU is the ticker symbol for the iShares Gold Trust, which is an exchange-traded fund (ETF) that aims to track the performance of the price of gold.

  • Is IAU backed by physical gold?

    Yes, IAU is backed by physical gold. The ETF holds gold bars as its underlying asset, providing investors with exposure to the price movements of gold.

  • How much gold is in one IAU share?

    Each share of IAU represents a fractional ownership of the underlying gold held by the ETF. The specific amount of gold represented by one IAU share can change over time based on the total gold holdings and the number of outstanding shares.

  • When to buy IAU gold?

    The decision of when to buy IAU or any investment should be based on individual financial goals, market conditions, and personal investment strategies. It is recommended to conduct thorough research, consider one's risk tolerance, and consult with a financial advisor before making investment decisions.

  • Where does IAU store its gold?

    IAU stores its gold in secure vaults operated by custodians, which are typically banks or other financial institutions. The exact location of the vaults may vary over time, and the custodians ensure the safe storage and security of the physical gold.