GOAU includes a 30% tilt toward royalty and streaming companies, which Holmes believes will help investors better manage many common risks associated with traditional producers, such as building and maintaining mines, among others. Moreover, the lower risk may help diminish risk since royalty companies have historically rewarded investors by increasing dividends at a faster clip than the broader equity market.
Top holdings include Royal Gold 9.8%, Wheaton Precious Metals Corp 9.8%, Franco Nevada Corp 9.8%, Kirkland Lake Gold 4.0% and Premier Gold Mines 4.0%.
Gold miner ETF investors may have recently seen some major shifts in their portfolio exposure as some ETF plays have grown too big for their own holdings. Consequently, investors may consider a smart beta gold miner play as an alternative to gain exposure to more undervalued picks.
“The gold mining market has gone through a big disruption over the past few months, with the GDXJ which grew so large that its constituents had massive share dilution, and then it had to sell off many of its holdings which just knocked down some really high quality names, like Klondex and Wesdome,” Holmes added. “I think now that the dust has settled from that, it is a good buying opportunity for many of these small- and mid-cap miners.”
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Disclosure: ETF Trends publisher Tom Lydon is on the board of U.S. Global Investors.