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 GOAU, RING, and GDX.
- The top holding of the first fund is Franco-Nevada Corp., and the top holding of the other two funds is Newmont 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 9.1% over the past 12 months compared to the S&P 500’s total return of 27.9%, as of Nov. 30, 2021. The best-performing gold miner ETF, based on performance over the past year, is the U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU).
We examine the three best gold miner ETFs below. All numbers below are as of Nov. 30, 2021.
- Performance Over One-Year: -4.0%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 6.20%
- Three-Month Average Daily Volume: 31,349
- Assets Under Management: $95.6 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: -5.1%
- Expense Ratio: 0.39%
- Annual Dividend Yield: 1.58%
- Three-Month Average Daily Volume: 152,408
- Assets Under Management: $489.7 million
- Inception Date: Jan. 31, 2012
- Issuer: BlackRock Financial Management
RING tracks the MSCI ACWI Select Gold Miners Investable Market Index, an index of global companies primarily engaged in gold mining. Just over half of companies represented in the portfolio are based in Canada, with the U.S. and South Africa receiving the next largest portions. The fund focuses specifically on large-cap companies and adopts a blended strategy. The top holdings of RING 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, ABX:TSE), a Canada-based gold mining company mainly focused on the production of gold and copper; and Wheaton Precious Metals.
- Performance Over One-Year: -7.8%
- Expense Ratio: 0.51%
- Annual Dividend Yield: 0.55%
- Three-Month Average Daily Volume: 21,662,968
- Assets Under Management: $13.7 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. 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, Barrick Gold, and Franco-Nevada.
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