Millennial Investors Like Gold

Last week in the State Street Global Advisors’ Gold ETF Impact Study, the firm reported that “Among approximately 1,000 investors surveyed, Millennials have the biggest allocation to gold at 17%, with Baby Boomers and Gen X investors lagging behind at just 10%.” The report also highlighted that millennials are more positive toward this asset class when compared to the other generations.

The study supported this by asking investors from the three generations about their thoughts on several different gold ETF topics. The results showed that a majority of millennials believe that gold ETFs are the best way to invest in gold. Specifically, 69% of millennials agreed compared to 55% of baby boomers and 35% of Gen Xers. On top of that, the report also showed that “Survey participants who hold gold ETFs are more likely to be Millennials.” Ultimately, the study revealed that millennials have a significant amount of admiration for ETFs that give exposure to gold.

Although State Street’s SPDR ETF family only offers physical gold ETFs, there are multiple ways investors can gain access to this asset class through an ETF wrapper, including via gold mining equities. VanEck offers a pair of ETFs that respectively provide exposure to large-cap and small-cap gold miners.

Gold Mining ETFs

The VanEck Gold Miners ETF (GDX) has an expense ratio of 0.51% and nearly $12 billion in assets under management. This fund offers exposure to some of the largest gold mining companies globally in the market within its holdings. The ETF tracks the NYSE Arca Gold Miners Index. In the U.S., the fund holds top companies like Newmont Corp., Barrick Gold Corp., and Franco-Nevada Corp. GDX also offers exposure to gold mining companies based in Australia, Hong Kong, and South Africa, among other locations.

VanEck also offers the VanEck Junior Gold Miners ETF (GDXJ), which tracks the small-cap MVIS Global Junior Gold Miners Index. It has an expense ratio of 0.52% and an AUM of nearly $4 billion. The fund offers exposure to some of the top small-cap mining companies in the market that mine gold or silver. Domestically it offers exposure to companies like Pan American Silver Corp., Kinross Gold Corp., and Alamos Gold Inc. Much like GDX, it also offers exposure to several foreign mining companies based in countries like Australia, Canada, and the U.K.

Gold Mining ETF Performance

Both GDX and GDXJ rank among the lowest-cost gold miner ETFs, according to ETFDB.com. GDX posted an annualized five-year return of 8.90%, while GDXJ returned 4.26%. However, during the past 12 months, GDX was up 24.39% and GDXJ increased by 22.58%.

At the end of the day, there are several different ways that millennial investors can gain access to this asset class. Investing in funds that can give global exposure to large-cap and small-cap gold miners like GDX and GDXJ is one way investors can do so. 

By DNICK PECK

Source: VettaFi