Grantor Trust Definition

Learn the definition of grantor trust and other ETF terminology from the etf.com glossary.

Learn more about Grantor Trust

A grantor trust is a legal structure that is used to hold physical assets, such as gold or silver, for the benefit of investors. Grantor trusts are typically used for ETFs that track commodities, as they provide a secure and transparent way to store the underlying assets. When an investor purchases shares of a grantor trust ETF, they are essentially acquiring a fractional ownership interest in the physical assets held by the trust. This means that investors have a direct claim to the underlying assets, which can provide additional security and transparency compared to ETFs that track futures contracts. Grantor trust ETFs are generally considered to be more tax-efficient than ETFs that track futures contracts. This is because the income from physical assets is typically taxed at a lower rate than the income from futures contracts.

Related Terms

Physical ETF, Tax Efficiency, Futures