Investing in Exchange Traded Funds (ETFs) is one of the simplest ways to gain exposure to an asset class while diversifying the risk. Investors get the option to invest in varying quantities with mostly no minimum investment criteria, making the process relatively easier for smaller retail investors. Gold ETFs offer one of the best ways to invest in the shiny metal without having to hold it physically.
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Dynamic Active Global Gold ETF Trust Units (TSE:DXAU) and iShares S&P/TSX Global Gold Index ETF (TSE:XGD) are two Canadian gold ETFs that have shown high growth potential alongside the increasing gold prices. Let’s look at the two ETFs in detail.
Dynamic Active Global Gold ETF Trust Units (TSE:DXAU)
Dynamic Active Global Gold ETF provides exposure to a wide range of equity securities of global gold mining companies involved in different stages of the mining cycle. This ETF was launched in July 2024 on the Toronto Stock Exchange. DXAU has a management fee of 0.65% with net assets of C$66.80 million as of October 27.
As of the end of September 2024, DXAU’s top ten holdings constituted 71.2% of the total portfolio. Its top three holdings were Australia-based Spartan Resources Ltd. (TSE:SRI), Canada-based Alamos Gold (TSE:AGI), and Lundin Gold (TSE:LUG).
Since its inception in July, DXAU ETF’s NAV has grown by 29.8%.
iShares S&P/TSX Global Gold Index ETF (TSE:XGD)
The iShares S&P/TSX Global Gold Index ETF tracks and seeks to replicate the returns of the S&P/TSX Global Gold Index. XGD was launched in March 2001 and invests in equity securities of gold producers and related products.
As of October 29, this ETF’s net assets stood at C$1.51 billion. Its expense ratio is 0.61%. XGD’s top ten holdings account for 79.5% of the total portfolio. The three top holdings are U.S.-based Newmont Mining (NEM), Canada’s Agnico Eagle Mines (TSE:AEM), and Barrick Gold (TSE:ABX). Year-to-date, XGD ETF has returned 40.4%.
Overall, the XGD ETF has a Moderate Buy consensus rating. Of the 44 stocks held in the portfolio currently, 37 have Buys, six have Holds, and one stock has a Sell rating. Also, the average XGD ETF price target of C$28.19 implies 13.4% upside potential.
Ending Thoughts
Investing in Gold ETFs is one of the safest ways to invest in the precious metal. Gold ETF investing comes with a host of advantages, including transparency, exposure to real-time gold prices, liquidity, tax efficiency, and, most importantly, it acts as a hedge against inflation.
The DXAU and XGD ETFs provide most of these benefits, and investors can consider them after thorough research.
