Gold Miners ETF Has Potential to Shine

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The VanEck Gold Miners ETF (GDX) tracks a market-cap-weighted index of global gold-mining firms.

GDX is one of the most popular funds in the global gold-mining segment. The exchange-traded fund (ETF) is a trading powerhouse with deep primary, secondary and derivatives markets.

Following a 2013 overhaul of the fund’s index, GDX is no longer limited to U.S.-listed firms, nor does it filter out stocks that have hedged their gold exposure with derivatives. In addition, GDX includes companies that mine precious metals other than gold, so it’s not entirely pure-play gold miners.

GDX includes all the major names, but the fund’s broader take on the gold-mining space means that the big mining companies get less weight than in a neutral benchmark. As an industry benchmark, GDX falls a bit short, but it’s still hugely popular with investors.

The exchange-traded fund has amassed $12.7 billion in net assets with a 0.03% average spread and 58 holdings. It has a 0.52% expense ratio, meaning it is in the low-medium range of cost to hold in relation to other ETFs.

Source: StockCharts.com

The Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Gold Miners Index (GDMNTR), which is intended to track the overall performance of companies involved in the gold mining industry. This could be a great opportunity for investors looking to get into the gold-mining industry.

VanEck Gold Miners ETF has an MSCI ESG Fund Rating of AAA, based on a score of 8.71 out of 10. The MSCI ESG Fund Rating measures the resiliency of portfolios to long-term risks and opportunities arising from environmental, social and governance (ESG) factors. ESG Fund Ratings range from best (AAA) to worst (CCC). Highly rated funds consist of companies that tend to show strong and/or improving management of financially relevant environmental, social and governance issues. These companies may be more resilient to disruptions arising from ESG events.

However, as with any opportunity, I urge all potential investors to exercise their own due diligence in deciding whether or not this fund fits their own individual portfolio goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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