Top seven gold ETFs to consider as inflation rises to record high

Highlights

  • Gold is used as a hedging instrument against inflation.
  • There are currently 36 gold ETFs in the US market, with assets worth US$23.59 billion under management, as per etf.com.
  • The Dow Jones US Gold Mining Total Stock Market Index (DWCPCS) fell 3.92% YTD but rose around 3.55% in one month.

The gold market saw a lacklustre trading activity this year. However, the current high inflation might help collect some gains for the industry before the year ends. The Labor Department had said last week that US inflation increased to a 30-year high in October. Typically, gold prices rise when inflation rises. For instance, in 2019, gold prices rose after the Fed cut the interest rates.

The price of the yellow metal is currently around US$1,800 per ounce. 

However, gold ETFs are considered less risky compared to direct investments in gold. These ETFs track gold mining companies and gold prices.

Currently, there are 36 gold ETFs in the US, according to etf.com. These ETFs have assets under management (AUM) of around US$23.59 billion, with an average expense ratio of 0.58%. 

Here we explore seven gold ETFs with the highest AUM.

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VanEck Gold Miners ETF (GDX)

GDX is one of the popular funds in the gold mining segment. It includes firms that also mine other precious metals. This ETF tracks the market-cap-weighted index of gold-mining companies globally. GDX tracks the NYSE Arca Gold Miners index.

The ETF was launched in 2006 by VanEck. It is an open-ended fund. 

Expense ratio – 0.52%

Asset Under Management (AUM) - US$14.85 billion  

Average Daily Dollar Volume - US$658.89 million 

Average Daily Share Volume - 19,833,223

Total holdings - 55

The ETF gave a 3.66% return YTD and closed at US$34.90 on Nov 15. Its ex-dividend date is Dec 20, and the dividend yield is 1.91%.

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Top gold ETFs to watch

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VanEck Junior Gold Miners ETF (GDXJ)

The fund covers companies engaged in metal mining. It generates more than 50% of revenue from gold and silver. The ETF also includes mid-cap and small-cap companies. Its single stock exposure is limited to 8%. The ETF tracks MVIS Global Junior Gold Miners Index.

The open-ended ETF was launched in 2009.

Expense ratio – 0.53%

Asset Under Management (AUM) - US$4.97 billion  

Average Daily Dollar Volume - US$234.51 million

Average Daily Share Volume - 5,647,254

Total holdings - 101 

The ETF fell 11.74% YTD and closed at US$47.93 on Nov 15. Its ex-dividend date is Dec 20, and the dividend yield is 1.09%.

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Aberdeen Standard Physical Gold Shares ETF (SGOL)

The SGOL aims to give efficient gold exposure to investors. It prevents trustees from lending the underlying gold under grantor trust. The trust assets are vaulted in Zurich and London under the custody of JPMorgan. The fund holds physical gold bars and tracks the gold spot price. It was launched in 2009, and the issuer is Abrdn Plc. 

Expense ratio – 0.17%

Asset Under Management (AUM) - US$2.47 billion  

Average Daily Dollar Volume - US$15.28 million 

Average Daily Share Volume - 740,750

Total holdings – N/A

The ETF declined 2.24% YTD and closed at US$17.88 on Nov 15. 

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iShares MSCI Global Gold Miners ETF (RING)

Blackrock-issued RING ETF has exposure to gold mining companies. It started in 2012. It selects securities from MSCI ACWI Investable Market Index, which have no hedging to gold prices. The open-ended ETF tracks the MSCI ACWI Select Gold Miners IMI Index. 

Expense ratio – 0.39%

Asset Under Management (AUM) - US$541.45 million  

Average Daily Dollar Volume - US$3.42 million 

Average Daily Share Volume - 96,300

Total holdings - 40

The ETF fell 2.25% YTD and closed at US$29.10 on Nov 15. Its next ex-dividend date is Dec 13, and the dividend yield is 2.29%. 

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Sprott Gold Miners ETF (SGDM)

This ETF tracks Solactive Gold Miners Custom Factors Index. The fund gives more weightage to companies with lower debt to equity, higher free cash flow yield, and revenue growth.

The ETF was started in 2014 and is an open-ended fund.

Expense ratio – 0.50%

Asset Under Management (AUM) - US$251.24 million   

Average Daily Dollar Volume - US$687.29 thousand  

Average Daily Share Volume - 25,551  

Total holdings - 34

SGDM fell 1.96% YTD and closed at US$30.067 on Nov 15. 

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ProShares Ultra Gold (UGL)

The ETF offers two times the daily return of gold. It tracks the Bloomberg Gold Subindex as a benchmark to the price performance. The ETF’s focus is on the short term. It was launched in 2008 and is structured as a commodities pool.

Expense ratio – 0.95%

Asset Under Management (AUM) - US$240.28 million  

Average Daily Dollar Volume - US$5.67 million 

Average Daily Share Volume - 101,049

Total holdings – N/A

The ETF declined 8.43% YTD and closed at US$62.53 on Nov 15. 

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Top gold ETFs to explore.

Source – Pixabay

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Sprott Junior Gold Miners ETF (SGDJ)

The ETF tracks the index of small-cap gold mining firms where gold developers’ revenue growth and gold explorers' price momentum is weighted for shares. The fund was launched in 2015 and tracks Solactive Junior Gold Miners Custom Factors Index. The open-ended ETF issuer is Sprott.

Expense ratio – 0.50%

Asset Under Management (AUM) - US$136.20 million  

Average Daily Dollar Volume - US$1.03 million 

Average Daily Share Volume - 26,609

Total holdings - 34

The ETF declined 5.81% YTD and closed at US$47.02 on Nov 15. Its dividend yield is 1.18%. 

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Bottomline

The stock market is currently volatile. Hence, it might affect gold prices in the short term. However, although gold is not the only hedging instrument, it is tried and tested. Therefore, gold may still provide a hedge against high inflation in the longer term. 

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