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Investor Appetite Remains Strong For Leveraged Gold Mining ETFs

Friday, January 6, 2017 21:09
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There has been a nice lift in the Gold Miners since their mid-December lows, mostly tied to a rebound in spot Gold prices themselves during this time frame.

As a result, we’ve seen heavier than average trading volume in the two largest funds in the space, GDX (VanEck Vectors Gold Miners, Expense Ratio 0.53%, $10.5 billion in AUM) and GDXJ (VanEck Vectors Junior Gold Miners, Expense Ratio 0.57%, $3.4 billion in AUM).

There has also been what appears to be closing put selling in both GDX and GDXJ on this recent move higher as well. GDX has packed in new assets in the trailing one year period, impressively seeing more than $3.9 billion enter the fund via creation activity, while GDXJ has seen over $1.8 billion flow in during this time frame. This is in spite of volatile, and often rocky price performance in the sector, as even with this latest two week rally, the Miners are still trading significantly off of their August 2016 highs.

NUGT (Direxion Daily Gold Miners Index Bull 3X, Expense Ratio 1.05%, $1.4 billion in AUM) has benefitted from investor appetite for Miner ETFs as well in the trailing one year period, reeling in more than $328 million in new assets during this time frame in its own right, including more than $180 million just in the trailing one month. JNUG (Direxion Daily Junior Gold Miners Index Bull 3X, Expense Ratio 0.95%, $644 million in AUM) is designed just like NUGT in the sense that it attempts to deliver three times the daily returns of the underlying index, and is to GDXJ as NUGT is to GDX.

This fund was not on every radar say a year or so ago, but it has quickly become the fourth largest ETF in the “Gold Miners” segment in terms of asset size thanks to a prosperous 2016 in the sense of attracting net creation flows. DUST (Direxion Daily Gold Miners Index Bear 3X, Expense Ratio 0.95%, $242 million in AUM) remains very popular in daily trading (approximately 8 million shares traded daily) among portfolio managers and short term traders looking to capitalize on the high volatility in the Gold Miners space that we have seen over the past several months, and is the fifth largest fund in the segment in terms of asset size.

From here, there is a rather steep drop-off in terms of AUM size among other potentially useful Levered “Bear/Bull” products in the space that may catch some popularity here in this volatile environment, notably JDST (Direxion Daily Junior Gold Miners Index Bear 3X, Expense Ratio 0.95%, $81 million in AUM), GDXX (ProShares Ultra Gold Miners, Expense Ratio 1.11%, $11 million in AUM), GDJJ (ProShares Ultra Junior Miners, Expense Ratio 1.12%, $5 million in AUM), and GDXS (ProShares UltraShort Gold Miners, Expense Ratio 0.95%, $3 million in AUM).

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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