Canada Gold ETF Investing Guide

Investing in gold ETFs in Canada can be a savvy move for those looking to diversify their portfolios and potentially ride out market fluctuations.

The Canadian gold market is a significant player globally, with the country being one of the top gold-producing nations.

Gold ETFs in Canada offer a convenient and cost-effective way to invest in gold, with many options available to suit different investor needs.

Some popular gold ETFs in Canada include the iShares S&P/TSX Global Gold Index ETF and the Sprott Physical Gold Trust.

If you're looking for a gold ETF in Canada, there are several popular options to consider. The iShares MSCI Global Gold Miners ETF (RING) is one such option, launched in 2012 by BlackRock with $577 million in net assets.

This ETF tracks the MSCI ACWI Select Gold Miners Investable Market Index, following the performance of companies in both developed and emerging market economies whose primary revenue source is gold mining. The fund has a total of 38 companies in its portfolio, with Newmont, Barrick Gold, and Agnico Eagle Mines Ltd. making up roughly half of the ETF's portfolio.

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The iShares MSCI Global Gold Miners ETF offers a low expense ratio of 0.39% and a dividend yield of 2.08%. It awards semi-annual distributions, with the most recent distribution being $0.33 per share on Dec. 17, 2021.

Another popular gold ETF is the VanEck Vectors Junior Gold Miners ETF (GDXJ), launched by Van Eck in 2009 with approximately $4.4 billion in net assets. This fund offers exposure to gold mining firms with lower market cap values, aiming to mirror the Market Vectors Global Junior Gold Miners Index.

The fund has 100 holdings, with its largest position representing less than 6% of the total portfolio's value. Major portfolio holdings include Pan-American Silver, Evolution Mining, and Yamana Gold. The expense ratio for the fund is 0.52%, and the dividend yield is 1.76%.

Here's a comparison of the two ETFs:

Both ETFs offer a way to invest in gold mining companies, but they have different approaches and characteristics.

The iShares MSCI Global Gold Miners ETF (RING) has $577 million in net assets and tracks the MSCI ACWI Select Gold Miners Investable Market Index. Its top three holdings are Newmont, Barrick Gold, and Agnico Eagle Mines Ltd, making up roughly half of the ETF's portfolio.

The fund has a low expense ratio of 0.39%, and a dividend yield of 2.08%. It awards semi-annual distributions, with the most recent being $0.33 per share on Dec. 17, 2021.

The VanEck Vectors Junior Gold Miners ETF (GDXJ) has approximately $4.4 billion in net assets and aims to mirror the Market Vectors Global Junior Gold Miners Index. Its largest position represents less than 6% of the total portfolio's value.

The fund has a diversified portfolio, with its top 10 holdings making up less than 40% of the portfolio's assets. The expense ratio for the fund is 0.52%, and the dividend yield is 1.76%.

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Gold ETFs are generally safer than individual stocks due to their diversified nature. This is because they pool money from many investors to buy a small piece of many different gold assets.

The risk level across all gold ETFs will be fairly similar, so individual risk tolerance and investing style will determine which ETF is the safest.

Exposure to the performance of gold can be used to diversify your portfolio due to its low correlation with other asset classes.

The Sprott Gold Miners ETF (SGDM) is a great option for investors looking to tap into the gold mining industry. Launched in 2014, it holds equity in 33 different companies, including major names in gold and silver mining.

The fund's market capitalization is approximately $269 million, and it's designed to mirror the performance of the Solactive Gold Miners Custom Factors Index TR. This means it tracks the performance of 32 different precious metals companies.

The fund's annual operating expenses are 0.52%, although 0.02% of this is waived by the investment advisor, resulting in a net fund fee of 0.50%. This is a relatively low fee compared to other ETFs in the market.

The Sprott Gold Miners ETF offers a dividend yield of 1.22%, and it has paid a dividend every year since 2018. The ETF's last dividend payment was $0.36 per share on December 22, 2021.

Here are some key details about the Sprott Gold Miners ETF:

Overall, the Sprott Gold Miners ETF is a solid choice for investors looking to gain exposure to the gold mining industry. Its low fees and consistent dividend payments make it an attractive option for those seeking long-term growth.

The NAV chart shows the historical daily net asset value per unit (NAV) of the ETF, and identifies various distributions made by the ETF, if any.

The distributions are not treated as reinvested, so you won't see the impact of those reinvested earnings. The NAV values do contemplate management fees and other fund expenses.

The NAV chart does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder.

Outstanding shares in this ETF total 1,993,000 units.

The NAV values are not indicative of future NAV values, which will vary.

The premium discount percentage for this ETF is 0.30%.

Some gold ETFs pay dividends, but it's essential to note that dividend yields can change over time.

Dividend payments are not guaranteed and may fluctuate at any time, so it's crucial to stay informed about the ETF's performance.

The payment of distributions should not be confused with an ETF's performance, rate of return, or yield, and may include a return of capital.

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A return of capital is not taxable to the investor, but will generally reduce the adjusted cost base of the securities held for tax purposes.

Distributions are paid as a result of capital gains realized by an ETF, and income and dividends earned by an ETF are taxable to the investor in the year they are paid.

Investors should add the amounts of these distributions to the adjusted cost base of the units held to recognize that these distributions have been allocated to investors for tax purposes.

The characterization of distributions for tax purposes will not be known for certain until after the ETF's tax year-end, and will be reported annually by brokers on official tax statements.

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Vanguard ETFs are a popular choice for investors in Canada, offering low fees and a wide range of options.

One of the key benefits of Vanguard ETFs is their low cost, with many funds having expense ratios of less than 0.1%. This means that investors can keep more of their returns, rather than paying high fees to their investment manager.

Vanguard ETFs offer a wide range of investment options, including bonds, stocks, and commodities.

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When investing in a Gold ETF in Canada, it's essential to understand the performance disclaimer. Commissions, management fees, and expenses may be associated with an investment in the Global X Funds.

The Global X Funds are not guaranteed, and their values can change frequently. In fact, the Global X Gold ETF's value decreased by 1.26% in the past month and by 0.88% in the past three months.

Past performance may not be repeated, and the fund's performance since inception on June 24, 2009, as at December 31, 2024, is 4.70%. You can check the fund's performance over the years in the calendar year performance chart.

The calendar year performance chart shows that the Global X Gold ETF had a 10.91% return in 2017, but a -4.55% return in 2018. It's essential to review the prospectus before investing, as it contains important detailed information about the Global X Funds.

The indicated rates of return are historical and do not take into account sales, redemption, distribution, or optional charges or income taxes payable by any securityholder. This means that the actual returns on your investment may be lower than the rates shown in the table.

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Here's a breakdown of the Global X Gold ETF's performance over the past few years:

It's crucial to understand that the Global X Funds may have exposure to leveraged investment techniques that magnify gains and losses, resulting in greater volatility in value. This means that the fund's value can fluctuate rapidly, and you may experience significant losses.

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