Gold Miners ETF Has Potential to Shine

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.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.