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 gold miner exchange-traded funds (ETFs) with the best one-year trailing total returns are SGDJ, GOAU, and GDX.
- The top holdings of these ETFs are Skeena Resources Ltd., Franco-Nevada Corp., and Newmont Corp., respectively.
Six gold miner ETFs trade in the United States, 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 plunged 23.3% over the past 12 months compared to the S&P 500’s total return of 33.5%, as of Aug. 17, 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 three best gold miner ETFs below. All numbers below are as of Aug. 17, 2021.
- Performance Over One-Year: -16.0%
- Expense Ratio: 0.50%
- Annual Dividend Yield: 2.38%
- Three-Month Average Daily Volume: 25,948
- Assets Under Management: $123.1 million
- Inception Date: March 31, 2015
- Issuer: Sprott
SGDJ tracks the Solactive Junior Gold Miners Custom Factors Index. The benchmark 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.
SGDJ follows a blended strategy, investing in a mix of growth and value stocks. Its top three holdings are Skeena Resources Ltd. (SKE:TSE), a Canada-based junior mining exploration company; Bellevue Gold Ltd. (BGL:ASX), an Australia-based gold exploration company; and class A shares of Great Bear Resources Ltd. (GBR:TSX), a Canada-based gold exploration company.
- Performance Over One-Year: -21.7%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 6.66%
- Three-Month Average Daily Volume: 33,722
- Assets Under Management: $98.8 million
- Inception Date: June 27, 2017
- Issuer: U.S. Global Investors
GOAU aims to track the U.S. Global GO GOLD and Precious Metal Miners Index. The benchmark is designed to gauge the performance of companies producing precious metals and minerals, through either mining and production or passive ownership of royalties or production streams. The ETF provides exposure to a selection of companies operating within the gold mining industry.
The multi-cap fund follows a blended strategy of investing in both value and growth stocks. Its top three holdings are Franco-Nevada Corp. (FNV:TSE), a gold-focused royalty and streaming company; Wheaton Precious Metals Corp. (WPM:TSE), a precious metals streaming company; and Royal Gold Inc. (RGLD), a precious metals streaming and royalty company.
- Performance Over One-Year: -24.5%
- Expense Ratio: 0.51%
- Annual Dividend Yield: 0.59%
- Three-Month Average Daily Volume: 19,970,672
- Assets Under Management: $13.8 billion
- Inception Date: May 16, 2006
- Issuer: VanEck
GDX seeks to track the NYSE Arca Gold Miners Index, an index aimed at measuring the performance of companies operating in the gold mining industry. Companies must generate a minimum of 50% of total revenue from gold mining and related activities to be included in the index.
GDX enables investors to easily customize their overall commodity exposure by providing a targeted allocation to the gold mining industry in a single fund. The majority of the fund’s holdings are domiciled in Canada, the United States, or Australia. It follows a blended strategy of investing in a mix of growth and value stocks across the market capitalization spectrum.
The fund’s top three holdings are Newmont Corp. (NEM), a gold mining company focused on the production and exploration of gold, copper, silver, zinc, and lead; Barrick Gold Corp. (GOLD), a Canada-based gold mining company mainly focused on the production of gold and copper; and Franco-Nevada Corp., described above.
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