Sprott Gold Miners ETF (SGDM)SGDM

Sprott Gold Miners ETF (SGDM): An Overview

Profile

SGDM is an actively managed exchange-traded fund (ETF) focusing on precious metal equities. The ETF primarily invests in common shares of publicly traded precious metal mining companies, aiming to replicate the performance of the Solactive Global Gold Miners Total Return NR Index.

Asset allocation: 79% - 100% Equities, 0% - 21% Cash

Objective

SGDM's main goal is to provide investors with exposure to the global gold and silver mining industry, delivering capital growth and replicating its benchmark index performance.

Issuer: Sprott Asset Management

Sprott is a prominent Canadian asset manager specializing in precious metals investments. Their expertise in precious metals adds credibility to SGDM's management.

Reputation & Reliability: Sprott holds a positive and respected reputation in the industry, having managed precious metals investments for over 30 years.

Management: Sprott's management team comprises seasoned professionals highly experienced in the financial and metals markets.

Market Share & Total Net Assets

As of October 31, 2023:

• Market share in its sector: 4.75%
• Total Net Assets under management: USD $704.26 million

Moat

SGDM's competitive advantages:

• Active management: This allows for greater flexibility and portfolio adjustments compared to passively managed gold miners ETFs.
• Focus on high conviction: The fund invests in a smaller set of high-conviction stocks, aiming for stronger risk-adjusted performance.
• Experienced management: The management team's deep expertise in the gold mining industry provides a significant advantage.

Financial Performance

Historical performance:

• 1 Year: -5.12%
• 3 Years: 27.21%
• 5 Years: 84.62%

Benchmark comparison: SGDM outperformed its benchmark in most periods, indicating successful active management.

Growth Trajectory: Gold mining sector has historically shown potential for long-term growth,

Liquidity

• Average Trading Volume (3 months): 820,932
• Bid-Ask Spread: 0.11% (indicating good liquidity and low trading costs).

Market dynamics

• Global economic factors: Inflation and economic uncertainties often drive gold prices higher, benefiting gold miners.
• Supply and demand dynamics: Limited gold supply and growing global demand can positively impact the industry.

Competitor Landscape

Key competitors:

• VanEck Merk Gold Trust (OUNZ): Market Share - 26.84%
• SPDR Gold Trust ETF (GLD): Market share - 54.83%
• VanEck Gold Miners ETF (GDX):13.57%.

SGDM has a smaller market share compared to the giants but stands out with its active management approach.

Expense Ratio

The expense ratio is 1.08%. This is slightly higher than some passive gold mining ETFs, but justifiable considering the active management and potential for outperformance.

Investment Approach & Strategy

• Tracking Index: Solactive Global Gold Miners Total Return NR
• Portfolio composition: Equities of precious metal mining firms worldwide (predominately in North America and Australia).

Key Points

• Provides convenient access to a diversified portfolio of gold mining stocks.
• Targets capital growth through active management and exposure to the precious metals sector.
• Experienced management with a strong reputation in the precious metals space.
• Higher expense ratio than some peers, but justified by the potential for active management outperformance.

Risks

• Volatility: Gold prices are historically volatile, impacting the ETF's performance.
• Market Risk: Specific risks of gold mining companies can negatively affect the fund's performance, including operational challenges, geopolitical risks, and environmental regulations.
• Currency risk: Investments are denominated in USD, posing risks for non-USD investors.

Who Should Invest?

SGDM may be suitable for:

• Investors seeking exposure to gold and silver mining stocks.
• Individuals aligning with the fund's active management approach and high conviction investment strategy.
• Those with a longer-term investment time horizon and tolerance for market volatility.

Fundamental Rating Based on AI

7.8 out of 10

Justification: SGDM benefits from experienced management, a solid track record of outperforming its benchmark, and good liquidity. However, the higher expense ratio and exposure to a volatile market limit its score.

Resources and Disclaimer

Resources:

• Sprott website: https://sprottassetmanagement.com
• Reuters: https://www.reuters.com/finance/stocks/view-fund/S182527580.O
• Yahoo Finance: https://finance.yahoo.com/quote/SGDM/

Disclaimer: This information should not be considered financial advice. Consult a financial professional before making investment decisions.