White Paper - SGDM

Two Unique ETFs to Invest in Gold Stocks

Sprott ETFs provide investors with access to innovative and unique indexes that are designed to outperform passive market cap-weighted offerings.

Sprott Gold Miners Exchange Traded Fund (NYSE: SGDM) seeks to deliver exposure to the Sprott Zacks Gold Miners Index (NYSE: ZAXSGDM). The Index aims to track the performance of large to mid-capitalization gold companies whose stocks are listed on major U.S. exchanges.

Sprott Junior Gold Miners Exchange Traded Fund (NYSE: SGDJ) seeks to deliver exposure to the Sprott Zacks Junior Gold Miners Index (NYSE: ZAXSGDJ). This factor-based Index aims to track the performance of small-capitalization gold companies whose stocks are listed on major U.S. and Canadian exchanges.

Two Unique Indexes

Each Index is designed using specific FACTORS that MATTER for a particular strategy. These customized factors are selected because they have historically shown correlation to stock performance.

Each Index:

  • Seeks to outperform purely passive representations of the gold and silver mining industry.
  • Uses transparent, rules-based methodology designed to overweight gold stocks with attractive investment merits relative to the other stocks in the Index.
  • The stock selection and index weighting criteria were co-developed by Sprott Asset Management LP, a leading, long-time gold sector investor, and Zacks Index Services.

Including gold stocks in your gold allocation has the potential to boost returns while maintaining the portfolio diversification benefits of gold.

In a rising gold price environment, gold stocks have the potential to provide additional returns because:

  • The value of unmined gold reserves increases, making gold companies more valuable to investors

Whatever the portion that gold represents in your portfolio, allocating 20% to gold stocks may improve the overall return potential. Let’s look at the historical returns during the three most recent gold market rallies.

Gold Rally #1 In the December 2000 to February 2008 gold rally, including gold stocks generated significant value, providing over 100% of incremental performance.
Gold Rally #2 Following the 2008 financial crisis, adding gold stocks failed to generate incremental returns – the returns of gold bullion stocks were atypically comparable.
Gold Rally #3 Starting on January 1, 2016 to December 31, 2018, having 20% of your gold allocation in gold stocks would have resulted in cumulative performance of 28.28% compared to 20.83% if you just held gold bullion.

Past performance is not indicative of future results.

Historically, gold stocks entail greater risk and price volatility than gold bullion.

Performance as of March 31, 2019

Total Expense Ratio of Sprott Gold Miners ETF is 0.57%.

Total Expense Ratio of Sprott Gold Junior Miners ETF is 0.57%.

Performance data quoted represents past performance. Past performance is no guarantee of future results so that shares, when redeemed may be worth more or less than their original cost. The investment return and principal value will fluctuate. Current performance may be higher or lower than the performance quoted. Call 866.675.2639 for current month end performance.
A fund’s performance for very short time periods may not be indicative of future performance. The recent growth in the stock market has helped to produce short-term returns for some asset classes that are not typical and may not continue in the future.

1 Market Price is based on the midpoint of the bid/ask spread at 4 p.m. ET and does not represent the returns an investor would receive if shares were traded at other times.
2 Inception date of 07/15/2014.
3 The Underlying Index was created by Zacks Index Services (“Index Provider”) to provide a means of generally tracking the performance of gold and silver mining companies whose stocks are traded on major U.S. exchanges. An investor cannot invest directly in an index.
4 Inception date of 03/31/2015.

Sprott ETFs Factors that Matter