Looking back to the first half of 2016, exchange traded funds that track precious metals miners have been the top performers so far this year, and the metal producers group may continue to shine through the second half.
Year-to-date, the S&P 500 rose 2.4%, the Dow Jones Industrial Average gained 2.9% and the Nasdaq Composite dipped 3.9%.
In contrast, among the top ETFs of the year, the PureFunds ISE Junior Silver ETF (NYSEArca: SILJ) surged 181.1%, Global X Gold Explorers ETF (NYSEArca: GLDX) jumped 137.4%, iShares MSCI Global Silver Miners Fund ETF (NYSEArca: SLVP) advanced 129.5%, Global X Silver Miners ETF (NYSEArca: SIL) increased 127.8% and VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) rose 118.9%.
SILJ tries to reflect the performance of the ISE Junior Silver (Small Cap Miners/Explorers) Index, which is comprised of silver exploration and mining exposure of small-cap companies, such as 16.5% Coeur Mining (NYSE: CDE), 14.2% Pan American Silver (NasdaqGS: PAAS) and 14.1% First Majestic Silver (NYSE: AG). The junior silver miner ETF has a large 67.8% tilt toward Canadian names, followed by 33.9% U.S. exposure.
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GLDX tracks the Solactive Global Gold Explorers Total Return Index, which includes global gold miners, with heavy 81.8% emphasis on Canadian miners, along with 16.6% Australian companies.
SLVP follows the MSCI ACWI Select Silver Miners Investable Market Index, which includes global silver mining stocks, and also has a large 63.7% tilt toward Canadian companies, along with 12.7% U.S., 12.0% U.K. and 5.4% Mexico. The silver miner ETF also holds a large 22.1% position in Silver Wheaton Corp (NYSE: SLW).
SIL, the largest silver miner-related ETF, tries to mirror the Solactive Global Silver Miners Total Return Index, which is also comprised of global silver miners. However, SIL has a lower 50.5% country tilt toward Canada, but a much larger 22.0% position in the U.S. and 21.0% in Mexico. Additionally, SIL is slightly more diversified, with only a 11.6% weight in SLW.
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Lastly, GDXJ, the largest junior gold miner ETF, tries to reflect the performance of the MVIS Global Junior Gold Miners Index, which includes micro- and small-cap gold miners. The fund has a large 65.0% country weight toward Canada, along with 12.4% U.S., 8.8% Australia and 5.0% U.K.
Precious metals miners have been the hot spot for most of the year as gold bullion strengthened on safe-haven demand and a more dovish Federal Reserve outlook.