Gold prices (XAU-USD) are up more than 16% year-to-date, as speculators see higher chances of an interest rate cut in September. This seems to be an apt time to research gold investments. Investing directly in the physical yellow metal is a tedious task. Hence, investors can consider Gold ETFs as a cheaper and more diversified way of gaining exposure to the precious metal. We used TipRanks’ ETF Comparison tool for the Best Gold Miners ETFs to compare Sprott Gold Miners ETF (SGDM), iShares Gold Producers UCITS ETF USD (ISGPF), and VanEck Gold Miners ETF (GDX) to find the ETF that could offer the shiniest returns.
// Additional Insight: Gold prices typically rise in times of economic uncertainty or inflation fears, making gold a popular investment choice for diversifying a portfolio and hedging against market volatility.
TipRanks’ ETF Comparison Tool enables the comparison of ETFs based on several parameters, including AUM (assets under management), funds flow, expense ratio, technicals, dividend analysis, and performance over different periods. Let’s learn more about the three Gold Miners ETFs and which one is the best pick based on the potential price target upside.
// Additional Insight: Understanding the key metrics and indicators when evaluating ETFs is crucial for making informed investment decisions and maximizing potential returns.
Sprott Gold Miners ETF (SGDM)
The Sprott Gold Miners ETF tracks the performance of the Solactive Gold Miners Custom Factors Index, which, in turn, replicates the performance of gold mining companies whose stocks are mainly listed on the Canadian and U.S. exchanges. The companies in this index usually include large-cap gold miners that have high revenue growth, free cash flow yield, and the lowest long-term debt to equity.
// Additional Insight: Investing in companies with strong financials and growth potential within the gold mining industry can offer stability and long-term returns for investors seeking exposure to the sector.
Notably, SGDM has the lowest expense ratio of 0.50% of the three ETFs discussed here. As of July 22, SGDM had 37 holdings in its portfolio with an AUM (assets under management) of $264.93 million. The three largest holdings are Newmont Mining (NEM), Agnico-Eagle Mines (TSE:AEM), and Wheaton Precious Metals (TSE:WPM). These three constitute about 31% of the total portfolio.
// Additional Insight: Lower expense ratios can translate to higher net returns for investors over time, making SGDM an attractive option for cost-conscious investors looking to optimize their investment returns.
On TipRanks, SGDM has a Moderate Buy consensus rating based on 31 Buys, five Holds, and one Sell recommendation. The average Sprott Gold Miners ETF price target of $34.49 implies 17.6% upside potential from current levels.
// Additional Insight: Analyst ratings and price targets provide valuable insights into market sentiment and potential future performance, helping investors make informed decisions based on expert opinions and forecasts.
iShares Gold Producers UCITS ETF USD (ISGPF)
The iShares Gold Producers UCITS ETF seeks to track the performance of the S&P Commodity Producers Gold. This index gives exposure to companies engaged in gold exploration and production. ISGPF has the highest expense ratio of 0.55% among the three ETFs discussed here.
// Additional Insight: Choosing ETFs with exposure to specific sectors or industries, such as gold producers, can provide targeted investment opportunities for investors looking to capitalize on sector-specific trends and performance.
As of July 22, ISGPF had 62 holdings, with an AUM of $1.69 billion. The three largest holdings are Newmont Mining, Agnico-Eagle Mines, and Barrick Gold (TSE:ABX). They represent roughly 30.9% of the total portfolio.
// Additional Insight: Diversification across a range of holdings can help mitigate risks associated with individual company performance, providing investors with a more balanced and stable investment portfolio.
On TipRanks, ISGPF has a Moderate Buy consensus rating based on 53 Buys, eight Holds, and one Sell rating. The average iShares Gold Producers UCITS ETF price target of $19.95 implies 15.2% upside potential from current levels.
// Additional Insight: Analyzing analyst recommendations and price targets can offer valuable insights into market expectations and potential investment opportunities, guiding investors in making well-informed decisions.
VanEck Gold Miners ETF (GDX)
The VanEck Gold Miners ETF seeks to track the performance of the NYSE Arca Gold Miners Index, which in turn tracks the performance of companies from the global gold mining industry. The ETF has a moderate expense ratio of 0.51%.
// Additional Insight: Global exposure in gold mining investments through ETFs like GDX can provide investors with opportunities to benefit from diverse market conditions and geographic regions, enhancing portfolio diversification.
As of July 22, there were 55 holdings in GDX’s portfolio, with an AUM of $14.37 billion. The top three companies in the ETF, Newmont Mining, Agnico-Eagle Mines, and Barrick Gold (GOLD), contribute 32.3% of the overall portfolio.
// Additional Insight: Concentrated holdings in leading gold mining companies within an ETF like GDX can offer exposure to industry leaders and potential growth opportunities, providing investors with a balanced mix of stability and growth potential.
Similar to the other two ETFs, GDX has a Moderate Buy consensus rating based on 48 Buys, six Holds, and one Sell recommendation. The average VanEck Gold Miners ETF average price target of $42.79 implies 14.3% upside potential from current levels.
// Additional Insight: Investors can capitalize on analyst consensus ratings and price targets when evaluating ETF options like GDX, leveraging expert opinions to make informed investment decisions and optimize returns based on market expectations.
Ending Thoughts
Investing in Gold miners ETFs can be an apt choice for investors with a moderate risk-return profile. Gold is considered one of the best hedges against inflation. Of the aforementioned three Gold ETFs, the Sprott Gold Miners ETF seems the best pick based on the upside potential assigned by analysts. Plus, SGDM offers a yield of 1.18% through a regular annual dividend of $0.35 per unit, making it an attractive investment opportunity.
// Additional Insight: Leveraging gold miners ETFs can provide investors with exposure to gold industry leaders and potential capital appreciation in a diverse and cost-effective manner, offering a strategic investment option to navigate market volatility and economic uncertainties effectively.
Disclosure
