10 Best Mining ETFs
In this article, we discuss 10 best mining ETFs. If you want to skip our discussion on the mining industry, head directly to 5 Best Mining ETFs.
Mining and metals operations are long-term investments. In today's fast-changing environment, companies need to look ahead for sustainable growth. As highlighted by Deloitte, while many mining firms have general ESG goals, specific nature-related targets are rare. Often, ESG is treated separately from core business functions. For example, processes like site selection and mine planning continue as usual. However, nature's impact is expected to affect mining companies directly or through supply chains in the next decade. This impact can create or destroy value in different scenarios. Reflecting these impacts in strategies and valuations is crucial. Developing skills and understanding will help companies protect against threats and make the most of opportunities. Moving forward, mining firms with an integrated approach to nature within their ESG strategy will have an advantage in funding, insurance, talent attraction, and securing permits and social approval.
According to KPMG, with the global economy transitioning toward a carbon-free future, a significant concern is whether mining and metals companies possess the capability to supply the increasing quantities of materials required for products like wind turbines, solar panels, and electric vehicles. These materials are essential for facilitating the shift to a net-zero world. The mining and metals industry, as per a global survey conducted by KPMG International, involving over 400 C-level executives representing diversified mining and metal production activities, ranging from steel to coal to lithium, appears to hold a strong belief in its capacity to meet these increasing demand projections. Optimistic viewpoints outnumbered pessimistic ones by nearly 12 to 1 in the survey results. However, among producers of materials critical to achieving a net-zero future, such as lithium and copper, the ratio slightly decreases to 6 to 1 in favor of optimism. KPMG International interviewed Rohitesh Dhawan, who serves as the President and CEO of the International Council on Mining & Metals, an organization representing a significant portion of the global industry. Dhawan, in his role as a representative of the industry, understands its crucial role in a range of issues during this pivotal period in history. He said:
“We’re entering a new phase that we’ve never had before. The world is now fully invested in our industry in a way it was not previously. This means that the things that got us here aren’t the things that will take us to the next phase in our relationship with society. It requires us to engage differently.”
As per PwC’s findings, mining revenue remained stable at $711 billion in 2022, marking another year of strong financial performance. However, rising costs and economic uncertainties led to a decrease in EBITDA margins from 32% to 29%. According to PwC, the market capitalization of the Top 40 miners tripled from $400 billion in 2003 to $1.2 trillion in 2022. The energy transition's impact is expected to shape the industry for the next couple of decades. Miners will need to navigate the growing influence of governments and new entrants like automobile companies in the sector, while also positioning themselves well for the clean energy shift that relies on resource access. The focus on critical minerals dominated deal activities in 2022 as miners sought to take advantage of the global shift towards clean energy, driven by two key factors; firstly, these minerals' pivotal role in clean energy technologies like batteries, electric vehicles, and solar and wind power; and secondly, their significance in national defense, technologies, and weaponry. Exploration in gold, copper, lithium, and cobalt saw notable growth in 2022. Given the growing demand and limited supply of critical minerals, continued investment in exploration for these minerals is essential for driving the energy transition. Andries Rossouw, PwC Africa Mining Leader, stated:
“Looking forward, the next 20 years has the potential to be as positive for the industry as the last 20 years. Demand for critical minerals—which fuels a growing boom in sustainability requirements like electric vehicles—requires miners to reinvent and reimagine how they will best support their clients and stakeholders globally. The high-demand era of critical minerals is now. It’s full of opportunity; but for those miners who do not reimagine and reinvent their operations by finding the right value-chain partners, they will likely miss out on the opportunity.”
In this article, we explore some of the best mining ETFs, which provide investors with access to companies like Newmont Corporation (NYSE:NEM), Agnico Eagle Mines Limited (NYSE:AEM), and Cameco Corporation (NYSE:CCJ).
Our Methodology
We used an ETF screener and filtered out the best performing mining ETFs based on their 5-year performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These ETFs have amassed significant gains in the past 5 years. The list is ranked in ascending order of the 5-year performance of these mining ETFs as of September 9, 2023.
Pixabay/Public Domain
Best Mining ETFs
10. Global X Gold Explorers ETF (NYSE:GOEX)
5-Year Performance as of September 9: 27.18%
The Global X Gold Explorers ETF (NYSE:GOEX), which is one of the best mining ETFs, aims to reflect the price and yield performance of the Solactive Global Gold Explorers & Developers Total Return Index, prior to accounting for fees and expenses. This ETF grants investors access to a range of companies engaged in exploring gold deposits. It was introduced on November 3, 2010. As of September 8, 2023, the ETF's total assets stand at $34.52 million, with an expense ratio of 0.65%. Its portfolio consists of 51 stocks.
Hecla Mining Company (NYSE:HL) is one of the top holdings of the Global X Gold Explorers ETF (NYSE:GOEX). Hecla Mining Company (NYSE:HL) offers precious and base metal properties in the United States and globally. The company engages in the extraction of silver, gold, lead, and zinc concentrates. It also handles carbon material containing silver and gold, which it sells to custom smelters, metal traders, and third-party processors. Additionally, the company deals in doré, a substance containing silver and gold.
According to Insider Monkey’s second quarter database, 18 hedge funds were bullish on Hecla Mining Company (NYSE:HL), compared to 17 funds in the prior quarter. Eric Sprott’s Sprott Asset Management held the largest position in the company, with 2.63 million shares valued at $13.56 million.
9. iShares MSCI Global Metals & Mining Producers ETF (BATS:PICK)
5-Year Performance as of September 9: 29.46%
The iShares MSCI Global Metals & Mining Producers ETF (BATS:PICK) aims to replicate the performance of the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index. This index tracks global companies primarily engaged in mining, extraction, and production of various metals, excluding gold and silver. Launched on January 31, 2012, the ETF holds approximately $1.43 billion in net assets, with a portfolio containing 267 stocks as of September 9, 2023. The expense ratio is 0.39%.
BHP Group Limited (NYSE:BHP) is the largest holding of the iShares MSCI Global Metals & Mining Producers ETF (BATS:PICK). BHP Group Limited (NYSE:BHP) functions as a resource company with operations spread worldwide. The company's activities are divided into Copper, Iron Ore, and Coal segments. Its operations include mining copper, silver, zinc, molybdenum, uranium, gold, iron ore, as well as metallurgical and energy coal.
According to Insider Monkey’s second quarter database, 23 hedge funds were long BHP Group Limited (NYSE:BHP), compared to 24 funds in the preceding quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with approximately 1.8 million shares worth $105.94 million.
Like Newmont Corporation (NYSE:NEM), Agnico Eagle Mines Limited (NYSE:AEM), and Cameco Corporation (NYSE:CCJ), BHP Group Limited (NYSE:BHP) is one of the best mining stocks to buy.
Here is what Harding Loevner has to say about BHP Group Limited (NYSE:BHP) in its Q1 2021 investor letter:
“Our purchase of Australian mining company BHP is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
8. U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE:GOAU)
5-Year Performance as of September 9: 46.70%
The U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE:GOAU), recognized as one of the best mining ETFs, grants investors access to companies involved in the production of precious metals. This involvement can be either active, such as mining or production, or passive, like holding royalties or production streams. The ETF is based on the U.S. Global GO GOLD and Precious Metal Miners Index. It was introduced on June 27, 2017. As of September 7, 2023, the fund's net assets total $87.9 million, with an expense ratio of 0.60%. The ETF's portfolio consists of 28 stocks.
Franco-Nevada Corporation (NYSE:FNV) is a prominent holding of the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE:GOAU). Franco-Nevada Corporation (NYSE:FNV) functions as a company focused on gold-related royalties and streaming. It operates in Latin America, the United States, Canada, and internationally. The company is divided into two segments – Mining and Energy.
According to Insider Monkey’s second quarter database, 23 hedge funds were bullish on Franco-Nevada Corporation (NYSE:FNV), in contrast to the last quarter, when 31 funds had invested in the stock. Jean-Marie Eveillard’s First Eagle Investment Management is the largest position holder in the company, with 2.2 million shares worth $311.76 million.
Here is what Horizon Kinetics has to say about Franco-Nevada Corporation (NYSE:FNV) in its Q3 2022 investor letter:
“Back to basic principles. We don’t hold gold in client portfolios, we hold gold royalty companies. The two have surprisingly little in common. The gold royalty company generates very impressive profits even if the gold price never rises, and it earns those profits year after year. Here is a long-term chart of Franco Nevada Corp., the premier gold royalty company vs. gold itself: a comparable gold price today than a decade ago, yet Franco Nevada returned 12.5% annually, matching the S&P 500 return, despite its nearsole source of revenues unchanged. What will Franco Nevada’s earnings and share price do if gold rises over the course of a decade?”
7. VanEck Steel ETF (NYSE:SLX)
5-Year Performance as of September 9: 50.67%
The VanEck Steel ETF (NYSE:SLX) aims to closely replicate the price and yield performance of the NYSE Arca Steel Index. This index is designed to reflect the overall performance of companies within the steel sector. VanEck Steel ETF (NYSE:SLX) is one of the best mining ETFs. The ETF was introduced on October 10, 2006. As of September 8, 2023, the fund holds net assets totaling $121.50 million, with a portfolio including 26 stocks. Its net expense ratio is 0.56%.
Rio Tinto Group (NYSE:RIO) is one of the top holdings of the VanEck Steel ETF (NYSE:SLX). Rio Tinto Group (NYSE:RIO) is involved in the global exploration, mining, and processing of mineral resources. The company's operations are categorized into Iron Ore, Aluminium, Copper, and Minerals Segments. Additionally, Rio Tinto Group (NYSE:RIO) owns and manages open pit and underground mines, and facilities such as refineries, smelters, concentrators, and power stations.
According to Insider Monkey’s second quarter database, 29 hedge funds were bullish on Rio Tinto Group (NYSE:RIO), compared to 33 in the previous quarter. Brandon Haley’s Holocene Advisors held a significant position in the company, with 869,470 shares worth $55.5 million.
HL International Equity Strategy made the following comment about Rio Tinto Group (NYSE:RIO) in its first quarter 2023 investor letter:
“In terms of geographical performance, the eurozone emerged as the top-performing region, and our stocks did better still, fueled by the strong performance of Infineon, L’Oréal, and Schneider Electric. EMs, which lagged the index, were boosted by the improving outlook for semiconductor companies TSMC and Samsung. Mexico’s FEMSA also contributed strongly to relative returns. Europe ex EMU was the weakest region primarily due to the underperformance of SE Banken and UK miner Rio Tinto Group (NYSE:RIO). The latter was affected by concerns over softer iron ore pricing in the current year, another reflection of manufacturing weakness in steelmaking giant China.”
6. SPDR S&P Metals and Mining ETF (NYSE:XME)
5-Year Performance as of September 9: 51.77%
The SPDR S&P Metals and Mining ETF (NYSE:XME) seeks to deliver investment outcomes that align with the total return performance of the S&P Metals and Mining Select Industry Index. It provides exposure to the metals and mining sector within the S&P Total Market Index, including sub-industries like Aluminum, Coal & Consumable Fuels, Copper, Diversified Metals & Mining, Gold, Precious Metals & Minerals, Silver, and Steel. Launched on June 19, 2006, the fund holds assets under management valued at $1.73 billion as of September 7, 2023. Its portfolio includes 32 stocks, and it features an expense ratio of 0.35%. It is one of the best mining ETFs to monitor.
United States Steel Corporation (NYSE:X) is one of the top holdings of the SPDR S&P Metals and Mining ETF (NYSE:XME). United States Steel Corporation (NYSE:X) is a manufacturer and distributor of flat-rolled and tubular steel products, primarily serving markets in North America and Europe. The company's operations are divided into four segments – North American Flat-Rolled, Mini Mill, U. S. Steel Europe, and Tubular Products.
According to Insider Monkey’s second quarter database, 33 hedge funds were bullish on United States Steel Corporation (NYSE:X), up from 30 in the previous quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP held the largest position in the company, with 6.13 million shares valued at $153.4 million.
Like Newmont Corporation (NYSE:NEM), Agnico Eagle Mines Limited (NYSE:AEM), and Cameco Corporation (NYSE:CCJ), United States Steel Corporation (NYSE:X) is one of the best mining stocks to buy.
Click to continue reading and see 5 Best Mining ETFs.
Suggested articles:
Disclosure: None. 10 Best Mining ETFs is originally published on Insider Monkey.
