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 SGDM, GDX, and GOAU.
- The top holding of the first two funds is Newmont Corp., while the top holding of the third is Canada-listed shares of Franco-Nevada Corp.
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 declined by 27.2% over the past 12 months while the S&P 500 posted a total return of -12.5%, as of Sept. 7, 2022.
The best-performing gold miner ETF, based on performance over the past year, is the Sprott Gold Miners ETF (SGDM). We examine the three best gold miner ETFs below. All numbers below are as of Sept. 6, 2022. In order to focus on the funds' investment strategy, the top holdings listed for each ETF exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.
- Performance Over One-Year: -25.7%
- Expense Ratio: 0.50%
- Annual Dividend Yield: 0.31%
- Three-Month Average Daily Volume: 39,914
- Assets Under Management: $184.9 million
- Inception Date: July 15, 2014
- Issuer: Sprott
SGDM tracks the Solactive Gold Miners Custom Factors Index, which is comprised of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. The index focuses primarily on companies with the highest revenue growth and free cash flow yield as well as the lowest long-term debt-to-equity ratio. 71.3% of SGDM holdings are based in Canada, with the bulk of the remainder based in the U.S. A small portion of the portfolio includes companies based in South Africa, the U.K., and Australia.
The top holdings of SGDM include 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 focused mainly on the production of gold and copper; and Canada shares of Franco-Nevada Corp. (FNV:TSE), a gold-focused royalty and streaming company.
- Performance Over One-Year: -28.3%
- Expense Ratio: 0.51%
- Annual Dividend Yield: 0.55%
- Three-Month Average Daily Volume: 22,088,934
- Assets Under Management: $9.6 billion
- Inception Date: May 16, 2006
- Issuer: VanEck
GDX aims to track the NYSE Arca Gold Miners Index, an index composed of companies involved in the gold mining industry. This multi-cap, blended fund is among the most popular ETFs of its kind and enjoys a substantial liquidity advantage over other funds on similar themes. Nearly 42% of the fund's portfolio is in Canada-based stocks, with the U.S. and Australia getting the second- and third-largest representations, respectively. GDX also holds companies based in Brazil, South Africa, China, and several other countries.
- Performance Over One-Year: -31.7%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 6.20%
- Three-Month Average Daily Volume: 33,417
- Assets Under Management: $68.9 million
- Inception Date: June 27, 2017
- Issuer: US Global Investors
GOAU tracks the U.S. Global GO GOLD and Precious Metal Miners Index, an index comprised of companies engaged in the production of precious metals through either active mining and production or via passive means such as owning royalties or production streams. GOAU is a multi-cap fund targeting both growth and value stocks in developed markets. It is also highly concentrated in a small number of holdings, with the top 10 positions accounting for more than 59% of invested assets.
The top holdings of GOAU include Canada-listed shares of Franco-Nevada; Royal Gold Inc. (RGLD), a precious metals streaming and royalty company; and Wheaton Precious Metals Corp. (WPM:TSE), a Canada-based precious metals streaming company.
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