ETFs To Gain Exposure To Gold
The G-7, a group of representatives from several major industrial nations, recently announced its decision to ban Russian gold exports to stem the flow of funds into the country. The price of gold steadied after the ban was announced, which many analysts saw as more of a symbolic gesture than a meaningful one.
Some analysts further downplayed the expected impact because the London Bullion Market Association, the organization that sets standards for that market, had already removed Russian gold refiners from its accredited list. In fact, many market watchers felt the sanctions wouldn't have a long-term impact.
While the LBMA’s actions had largely already closed European and U.S. markets to gold from the region, the G-7 pledge would mean a total severance between it and the world’s top two trading centers. Russia can still find buyers elsewhere, as China and India are two of the largest nonmember customer-countries.
While many portfolio managers and financial advisors advocate for always holding some gold, there are moments like these where investors might feel compelled to increase or decrease exposure. The good news is there are interesting and useful options, however gold performs.
Strategy Shares Gold-Hedged Bond ETF (GLDB)
This ETF combines bonds and gold in one portfolio. GLDB seeks to blend an investment-grade bond portfolio with a gold hedge. According to the company, “The Fund’s investment strategy is premised on the proposition that an investment in gold can potentially provide a hedge against inflation for a bond investment” by seeking investments that correlate to the performance of the Solactive Gold Backed Bond Index.
This index seeks to provide 100% exposure to the U.S. dollar-denominated investment-grade corporate bond sector with a gold inflation hedge of a “notional value designed to correspond to the value of the Bond Component, with such notional value reset on a monthly basis.”
While the bond index aims to mirror the performance of investment-grade corporate bonds issued in U.S. dollars, the Solactive Gold-Backed Bond Index tracks the performance of the near-month gold futures contracts listed on the Chicago Mercantile Exchange.
FT Cboe Vest Gold Strategy Target Income ETF (IGLD)
IGLD seeks to provide participation in the price returns of the SPDR Gold Trust while providing a consistent level of income. This ETF invests in U.S. Treasury securities and in shares of a wholly owned subsidiary that holds exchange-traded options, including FLEX Options, that reference the performance of the underlying ETF.
If you’re looking for a dividend, as in an equity-focused product, there are a number of choices:
SGDM is a portfolio of 30-plus companies that tracks the performance of the Solactive Gold Miners Custom Factors Index. It offers a dividend yield of 1.22%.
VanEck Vectors Gold Miners ETF (GDX)
This ETF currently has almost $12 billion in net assets and more than 50 holdings. It has a dividend yield of 1.15% that is distributed annually.
iShares MSCI Global Gold Miners ETF (RING)
RING tracks the MSCI ACWI Select Gold Miners Investable Market Index, which means exposure to companies in developed as well as emerging markets. The fund has a dividend yield of 2.08% that is paid semiannually.
VanEck Junior Gold Miners ETF (GDXJ)
This ETF currently has nearly $4 billion in AUM, significant for a “junior” miner fund. The fund tracks the Market Vectors Global Junior Gold Miners Index and has a dividend yield of 1.76%.
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