Gold is commonly utilized by investors as a hedge against market risks such as inflation and geopolitical turmoil. Investors looking for exposure to this safe haven asset have several options, including investing in gold bullion directly or buying gold futures contracts. Another way to gain indirect exposure to gold is by investing in exchange-traded funds (ETFs) that own gold mining companies. Many investors see ETFs as a liquid and low-cost option for gaining exposure to this part of the gold industry.
- The gold mining industry has significantly underperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are SGDJ, GOEX, and GDXJ.
- The top holdings of these ETFs are Victoria Gold Corp., Hecla Mining Co., and Gold Fields Limited, respectively.
There are 7 gold mimer ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). These are ETFs that track gold mining stocks, rather than ETFs tracking gold as a commodity. The gold mining industry, as measured by the NYSE Arca Gold Miners Index, has significantly underperformed the broader market. The index has risen 9.1% over the past 12 months compared to the S&P 500's total return of 48.7%, as of May 14, 2021. The best-performing gold miner ETF, based on performance over the past year, is the Sprott Junior Gold Miners ETF (SGDJ). We examine the 3 best miner ETFs below. All numbers below are as of May 17, 2021.
- Performance over 1-Year: 49.0%
- Expense Ratio: 0.50%
- Annual Dividend Yield: 2.05%
- 3-Month Average Daily Volume: 44,541
- Assets Under Management: $141.0 million
- Inception Date: March 31, 2015
- Issuer: Sprott
SGDJ tracks the Solactive Junior Gold Miners Custom Factors Index, which gauges the performance of small-cap gold companies with special emphasis given to gold producers having the strongest revenue growth and exploration companies having the strongest stock price momentum. The majority of the ETF's holdings are domiciled in either Canada or Australia. It follows a blended strategy, investing in a mix of growth and value stocks. The fund's top three holdings include Victoria Gold Corp. (VGCX:TSE), a Canada-based mineral exploration and development company; Argonaut Gold Inc. (AR:TSE), a Canada-based gold mining and exploration company; and Koza Altin Isletmeleri A.S. (KOZAL:IST), a Turkey-based gold mining company.
- Performance over 1-Year: 22.1%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 2.61%
- 3-Month Average Daily Volume: 11,735
- Assets Under Management: $57.8 million
- Inception Date: Nov. 3, 2010
- Issuer: Mirae Asset
GOEX tracks the Solactive Global Gold Explorers & Developers Total Return Index, which gauges the performance of a basket of global gold exploration companies. More than two thirds of the fund's holdings are domiciled in Canada or Australia. The fund offers a targeted play on the gold exploration industry. It follows a blended strategy, investing in a mix of value and growth stocks with various market capitalizations. The fund's top three holdings include Hecla Mining Co. (HL), a silver and gold production company; Kirkland Lake Gold Ltd. (KL:TSE), a Canada-based gold mining company; and SSR Mining Inc. (SSRM:TSE), a Canada-based precious metals mining company.
- Performance over 1-Year: 19.1%
- Expense Ratio: 0.52%
- Annual Dividend Yield: 1.68%
- 3-Month Average Daily Volume: 6,859,830
- Assets Under Management: $5.8 billion
- Inception Date: Nov. 10, 2009
- Issuer: Van Eck Associates Corp.
GDXJ is a multi-cap fund that targets the MVIS Global Junior Gold Miners Index. The index tracks the performance of primarily small-cap gold and silver mining companies. This means that GDXJ does not provide pure play exposure to gold mining stocks. Like both SGDJ and GOEX above, the majority of GDXJ's holdings are based in Canada or Australia. GDXJ has been used by investors to trade as a leveraged play on underlying natural resources, which can contribute to significant volatility for owners of the ETF. But this leverage also means the fund is poised to surge if commodity prices rise. The top holdings of GDXJ include sponsored ADRs of Gold Fields Limited (GFI), a South Africa-based gold mining company; Pan American Silver Corp. (PAAS), a Canada-based silver and other precious metals mining company; and Evolution Mining Limited (EVN:ASX), an Australia-based gold mining company.
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