Tag: annualized increase of 2.4% in the gross domestic product

Master the Art of Safeguarding Your Investments From Currency Volatility With 5 Assets

Posted on by The INO.com Team

Jerome Powell and his team at the Federal Reserve have raised the benchmark borrowing cost to 5.25%-5.50%. While a 2.6% rise in inflation, down from a 4.1% rise in Q1 and well below the estimate for a gain of 3.2%, and an annualized increase of 2.4% in the gross domestic product in the second quarter, topping the 2% estimate, had raised hopes that the elusive “soft landing” could be within reach, recent developments have been less than encouraging.

As the Federal Reserve Bank of Kansas City’s annual gathering in Jackson Hole, Wyoming, gets underway, with a more-than-forecasted wage increase, there are increasing concerns that interest rates could stay higher for longer.

While a hawkish stance usually lends strength to the dollar, Fitch Ratings’ recent downgrade of the U.S. long-term rating to AA+ from AAA, citing the erosion of confidence in fiscal management, has weakened the global reserve currency.

Moreover, the slump in their market value and a consequent increase in their yields due to a selloff of long-duration fixed-income instruments, which led to Moody’s cutting ratings of 10 U.S. banks and putting some big names on downgrade watch, has not helped matters either.

With a material risk that an apparently resilient economy could find itself regressing into an economic slowdown, it is understandable why seasoned investors could look at international equities for diversification opportunities to manage tail risks.

However, the pandemic, armed conflict in Ukraine, shifting geopolitical inclinations in the Middle East, the recent expansion of the BRICS bloc of developing nations accompanied by calls to reduce reliance on the U.S. dollar, and the Bank of Japan’s policy tweak of loosening its yield curve are all indicating to a changing world order.

Hence, returns from international investments are as much a function of wild swings in currency exchange rates as they are of the performance of the securities of underlying businesses. To help investors reduce risk exposure to unfavorable impacts of the former, many currency-hedged mutual funds and ETFs focus on providing long (buy) and short (sell) exposures to many currencies.

In view of the above, these five exchange-traded funds could be worthy of consideration:

Xtrackers MSCI EAFE Hedged Equity ETF (DBEF)

DBEF is an exchange-traded fund launched and managed by DBX Advisors LLC. It offers currency-hedged exposure to developed equity markets outside the U.S., making it a suitable fixture in long-term buy-and-hold portfolios. DBEF uses short-term forward contracts to neutralize the impact of exchange rate fluctuations, thereby rendering the performance of the underlying stocks the sole driver of returns.

With $4.14 billion in AUM, DBEF’s top holding is Nestle S.A. (NSRGY), which has a 2.04% weighting in the fund. It is followed by  ASML Holding NV (ASML) at 1.72% and  Novo Nordisk A/S (NVO) at 1.65%. The highly diversified fund has 1,000 holdings, with only 18.97% of its assets concentrated in the top 10 holdings.

DBEF has an expense ratio of 0.35%, lower than the category average of 0.46%. It currently pays $6.22 annually as dividends, and its payouts have grown at a 55.7% CAGR over the past five years. It saw a net inflow of $21.22 million over the past month and $255.64 million over the past three months. The ETF has a beta of 0.71.

iShares Currency Hedged MSCI EAFE ETF (HEFA)

As the name suggests, HEFA is a currency-hedged exchange-traded fund that is managed by BlackRock Fund Advisors. The fund invests in public equity markets globally, excluding the U.S./Canada region, through derivatives and through other funds in value stocks of companies operating across diversified sectors.

Almost all of HEFA’s $3.46 billion in AUM is allocated to iShares MSCI EAFE ETF (EFA), which has a 99.95% weighting in the fund, with USD comprising the remaining assets of HEFA.

EFA’s top holding is Nestle S.A. (NSRGY), which has a 2.13% weighting in the fund, followed by  ASML Holding NV (ASML) at 1.76% and  Novo Nordisk A/S (NVO) at 1.68%. The highly diversified constituent fund has 1000 holdings, with only 17.08% of its assets concentrated in the top 10 holdings.

HEFA has an expense ratio of 0.35%, which is lower than the category average of 0.40%. It currently pays $6.56 annually as dividends, and its payouts have grown at a 49.1% CAGR over the past five years. It saw a net inflow of $74.06 million over the past month and $176.04 million over the past three months. The ETF has a beta of 0.7.

WisdomTree Japan Hedged Equity Fund ETF (DXJ)

DXJ is an exchange-traded fund co-managed by Mellon Investments Corporation and WisdomTree Asset Management, Inc. The fund offers broad-based exposure to the Japanese equity market while hedging out the effects of currency fluctuation. Hence, it is best suited for investors who are bullish on Japanese stocks but bearish on JPY’s value vis-à-vis that of USD.

With $2.72 billion in AUM, DXJ’s top holding is  Toyota Motor Corp. (TM), which has a 4.86% weighting in the fund, followed by Mitsubishi UFJ Financial Group, Inc. (MUFG) at 4.37%, and Mitsubishi Corporation (MSBHF) at 3.64%. The well-diversified fund has 435 holdings, with only 30.7% of its assets concentrated in the top 10 holdings.

DXJ has an expense ratio of 0.48%, which enables investors to benefit from hedging while incurring costs lower than what could be managed while doing it on their own. It currently pays $2.60 annually as dividends, and its payouts have grown at a 9.8% CAGR over the past five years.

DXJ’s net inflow came in at $23.56 million over the past month and $731.28 million over the past three months. It has a beta of 0.65.

WisdomTree Europe Hedged Equity Fund ETF (HEDJ)

HDJ is an exchange-traded fund co-managed by Mellon Investments Corporation and WisdomTree Asset Management, Inc. The fund offers broad-based exposure to the European equity market while hedging out the effects of currency fluctuation.

Hence, it is best suited for investors who are bullish on European stocks but wish to insulate themselves from the impact of fluctuation of the exchange rate of EUR with respect to USD.

With $1.40 billion in AUM, HEDJ’s top holding is Stellantis N.V. (STLA), which has a 6.91% weighting in the fund. It is followed by  ASML Holding NV (ASML) at 4.41% and  Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) at 4.37%. The fund has 127 holdings, with 41.83% of its assets concentrated in the top 10 holdings.

HEDJ has an expense ratio of 0.58% and currently pays $1.58 annually as dividends. The fund’s payouts have grown at a 9.8% CAGR over the past five years. DXJ’s net inflow came in at $28.25 million over the past three months. It has a beta of 0.88.

iShares Currency Hedged MSCI Japan ETF (HEWJ)

As the name suggests, HEWJ is a currency-hedged exchange-traded fund that is managed by BlackRock Fund Advisors. The fund invests in the public equity markets of Japan through derivatives and through other funds in value stocks of companies operating across diversified sectors. Hence, it is best suited for investors who are bullish on Japanese stocks but bearish on JPY’s value vis-à-vis that of USD.

Almost all of HEWJ’s $213.9 million in AUM is allocated to iShares MSCI Japan ETF (EWJ), which has a 99.95% weighting in the fund, with USD comprising the remaining assets of HEWJ.

EWJ’s top holding is  Toyota Motor Corp. (TM), which has a 5.16% weighting in the fund, followed by Sony Group Corporation (SONY) at 3.05% and Mitsubishi UFJ Financial Group, Inc. (MUFG) at 2.59%. The well-diversified fund has 238 holdings, with 23.5% of its assets concentrated in the top 10 holdings.

HEWJ has an expense ratio of 0.50%. It currently pays $12.31 annually as dividends, and its payouts have grown at a 92.3% CAGR over the past five years. HEWJ’s net inflow came in at $45.01 million over the past month and $61.84 million over the past three months. It has a beta of 0.63.

Build a Secure Portfolio with these 5 Stocks Amid 15-Year High Treasury Yield

Posted on by The INO.com Team

Last month, Federal Reserve Chair Jerome Powell announced the unanimous decision by the FOMC to raise key interest rates by another 25 bps. With this move, the central bank has raised the benchmark borrowing cost to 5.25%-5.50.

With a 2.6% rise in inflation, down from a 4.1% rise in Q1 and well below the estimate for a gain of 3.2%, and an annualized increase of 2.4% in the gross domestic product in the second quarter, topping the 2% estimate, the belief that Jerome Powell and his team at the Federal Reserve may be on the cusp of achieving the elusive “soft landing” was gaining strength in the market.

However, ECB raised interest rates by a quarter percentage point shortly after, citing persistent inflation. Moreover, the recently released minutes of the Fed’s July 25-26 policy meeting reveal broad expectations of ‘upside risks’ to inflation, leading to a fresh realization that rates could stay higher for longer, contrary to some initial forecasts and hopes of cuts starting in 2024.

In such a scenario, despite increased optimism, businesses are expected to remain weighed down by high borrowing costs, and economic activity is expected to remain stifled due to relatively scarce credit.

Moreover, with every increase in benchmark interest rates, a selloff of long-duration fixed-income instruments, such as the 10-year treasury notes, gets triggered, which causes a slump in their market value and a consequent increase in their yields. This also increases the benchmark 30-year mortgage rates, thereby depressing demand and deepening the crisis in which real estate has lately been finding itself.

Last week, as the 10-year Treasury yield rose to 4.307% from 4.258%, settling at its highest closing level since 2007, and the 30-year Treasury yield hit a 12-year high, rising to 4.411%, there is still a significant probability that in order to overcompensate for the infamous “transitory” call that caused the Fed to arrive (really) late in its fight against demand-driven inflation, the central bank may be sowing the seeds of economic stagflation.

An increase in borrowing costs would not just raise the cost of servicing the $32.7 trillion national debt; significant markdowns and prices of legacy bonds could crush the loan portfolios of banks that could share the same fate as the Silicon Valley Bank and the First Republic Bank. In this context, S&P's move to downgrade multiple U.S. banks citing ‘tough’ operating conditions hardly comes as a surprise.

Speaking of banks, the Bank of Japan’s policy tweak loosened its yield curve control, sparking widespread shock in the markets. To compound the miseries further, after placing the country on negative watch amid the debt-ceiling standoff at Capitol Hill back in May, Fitch Ratings recently downgraded U.S. long-term rating to AA+ from AAA, citing the erosion of confidence in fiscal management.

With HSBC Asset Management’s warning that a U.S. recession is coming this year, with Europe to follow in 2024, gaining credibility with each passing day, being diligent investors confident enough to increase their stakes in fundamentally strong businesses could be a time-tested method to navigate potential turbulence ahead.

Here are a few stocks which could be worthy of consideration:

Johnson & Johnson (JNJ)

JNJ has been around for 135 years and is a worldwide researcher, developer, manufacturer, and seller of various healthcare products. The company operates through three segments: Consumer Health; Pharmaceuticals; and MedTech.

Over the past three years, which have been turbulent, to say the least, JNJ’s revenue has grown at a 6.7% CAGR. During the same period, the company also registered EBITDA and total asset growth of 8.2% and 6.6%, respectively.

Despite flagging sales of Covid 19 Vaccines, JNJ’s reported sales during the fiscal year 2023 second quarter increased by 6.3% year-over-year to $25.53 billion. During the same period, the company’s adjusted net earnings increased by 6.5% and 8.1% year-over-year to $7.36 billion and $2.80 per share, respectively.

In addition to its robust financials, the relative immunity of its demand and margins to potential economic downturns make it an attractive investment option for solid risk-adjusted returns.

Merck & Company, Inc. (MRK)

MRK is a global healthcare company offering prescription medicines, vaccines, biological therapies, and animal health products. The company operates through Pharmaceuticals and Animal Health segments.

Over the past three years, MRK’s revenue has grown at a 9.9% CAGR, while its total assets have grown at a 4.9% CAGR.

On August 3, MRK announced that the U.S. Food and Drug Administration (FDA) approved an expanded indication for ERVEBO, which is now indicated for the prevention of disease caused by Zaire ebolavirus in individuals 12 months of age and older. The vaccine was previously approved for use in individuals of age 18 years and older.

On July 25, MRK announced a quarterly dividend of $0.73 per share of the company’s common stock for the fourth quarter of 2023. Payment will be made on October 6, 2023, to shareholders of record at the close of business on September 15, 2023.

MRK pays $2.92 annually as dividends. Its 4-year average dividend yield of 2.96% exceeds the industry average of 1.32%. The company has increased its dividend payouts over the past 12 years and at a 9.6% CAGR over the past five years.

During the second quarter of the fiscal year 2023, MRK’s revenue increased by 3% year-over-year to $15.04 billion. Excluding the $10.2 billion, or $4.02 per share, charge for the acquisition of Prometheus Biosciences, Inc. (Prometheus), the company’s non-GAAP net income increased by 5% and 4.8% year-over-year to $4.98 billion and $1.96 per share, respectively.

Analysts expect MRK’s revenue and EPS for the fiscal third quarter to increase by 1.7% and 4.9% year-over-year to $15.22 billion and $1.94, respectively. The company has further impressed by surpassing consensus EPS estimates in each of the trailing four quarters.

The Coca-Cola Company (KO)

As a world-renowned beverage company, KO manufactures, markets, and sells various non-alcoholic beverages. The company operates through six segments: Europe, the Middle East, and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments.

Over the last three years, which included a pandemic of all things, KO’s revenues have grown at an 8.7% CAGR, while its EBITDA has grown at 7.1% CAGR. The company’s net income has grown at a 4.6% CAGR during the same period.

On July 12, KO and its eight bottling partners from around the world announced the creation of a new $137.7 million venture capital fund focusing on sustainability investments. The fund would focus on key investments in packaging, decarbonization, and other initiatives with the potential to reduce KO’s system-wide carbon footprint.

During the fiscal 2023 second quarter, KO’s net revenue grew 6% year-over-year to $12 billion, while its organic (non-GAAP) revenue grew 11% year-over-year. During the same period, the company’s comparable (non-GAAP) EPS also grew 11% year-over-year to $0.78.

In concurrence with the company’s raised guidance, analysts expect KO’s revenue and EPS for the fiscal year 2023 to increase by 4.6% and 6.4% year-over-year to $45.02 billion and $2.64, respectively. Both metrics are expected to keep growing over the next two fiscals to come in at $49.92 and $3.03, respectively.

PepsiCo, Inc. (PEP)

PEP is a global manufacturer, marketer, distributor, and seller of beverages and convenience foods. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East, and South Asia; Asia Pacific, Australia, New Zealand, and China Region.

Over the last three years, PEP’s revenues have grown at a 10% CAGR, while its EBITDA has grown at 7.7% CAGR. The company’s net income has grown at 4.9% CAGR during the same period.

On July 20, PEP announced its quarterly dividend of $1.265 per share, which translates to an annual dividend of $5.06. This signifies a 10 percent increase year-over-year. This dividend is payable on September 29, 2023, to shareholders of record at the close of business on September 1, 2023.

This marks PEP’s 51st consecutive annual dividend increase at a rate of 7.1% CAGR over the past five years.

During the fiscal 2023 second quarter, PEP’s organic (non-GAAP) revenue increased by 13% year-over-year, while its core (non-GAAP) EPS of $2.09 translated to a 15% year-over-year growth.

For fiscal year 2023, PEP now expects to deliver 10% organic revenue growth (previously 8%) and 12% core constant currency EPS growth (previously 9%).

Duke Energy Corporation (DUK)

As an energy company, DUK operates through two segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I).

Over the past three years, DUK’s revenue increased at a 6% CAGR, while its EBITDA has increased by 4.5% CAGR over the same time horizon.

On July 13, DUK announced its quarterly cash dividend of $1.025 per share of common stock, an increase of $0.02, and $359.375 per share on its Series A preferred stock, equivalent to $0.359375 per depositary share, payable on Sept.18, 2023.

DUK currently pays $4.10 per share of common stock as annual dividends, which have grown for the past 11 years and at 2.4% CAGR over the past five years. Through the consistent return of capital, DUK provides adequate income generation opportunities for investors to help them tide over economic uncertainty.

On August 15 and August 17, DUK filed a resource plan, and an updated Carbon Plan to serve the growing energy needs projected for South and North Carolina, respectively.

On July 6, DUK unveils Kentucky's largest utility-scale rooftop solar site, consisting of over 5,600 photovoltaic panels, at Amazon Air Hub. It will feed up to 2 megawatts of solar power directly onto the electric distribution grid.

For the six months of the fiscal that ended June 30, 2023, DUK’s total operating revenues and operating income increased by 2.1% and 12.4% year-over-year to $13.85 billion and $3.10 billion, respectively. As a result, the company’s net income and adjusted EPS for the period came in at $531 million or $2.10 per share, respectively.

The U.S. Dollar Is DOWN. Start Investing in These 5 Safe Haven Assets

Posted on by The INO.com Team

With the latest hike, Jerome Powell and his team at the Federal Reserve raised the benchmark borrowing cost to 5.25%-5.50%, thereby ratcheting it up from nearly 0% in  16 months.

While a 2.6% rise in inflation, down from a 4.1% rise in Q1 and well below the estimate for an increase of 3.2%, and an annualized increase of 2.4% in the gross domestic product in the second quarter, topping the 2% estimate, had raised hopes that the elusive “soft landing” could be within reach, recent developments have been less than encouraging.

Despite the falling unemployment rate, the number of jobs created in July came in lower than expected, which could be symptomatic of an economy slowly but surely footing the bill of aggressive interest-rate hikes. Moreover, with a more-than-forecasted increase in wages, there are increasing concerns that interest rates could stay higher for longer.

To compound the miseries further, after placing the country on negative watch amid the debt-ceiling standoff at Capitol Hill back in May, Fitch Ratings recently downgraded U.S. long-term rating to AA+ from AAA, citing the erosion of confidence in fiscal management.

As a result, despite the salvo of interest-rate hikes, the dollar has recently weakened in relation to its peers. The dollar index, a measure of the U.S. currency against six peers, fell 0.185%. The euro edged up 0.31% to $1.0978, and the yen strengthened 0.16% at 142.31 per dollar.

Moreover, with every increase in benchmark interest rates, a selloff of long-duration fixed-income instruments, such as the 10-year treasury notes, gets triggered, which causes a slump in their market value and a consequent increase in their yields.

After benchmark 10-year yields jumped by as much as 15 basis points above the key 4% level, Peter Schiff, CEO and chief economist at Euro Pacific Asset Management, warned of a crash in Treasuries. He has also predicted the benchmark 30-year mortgage rates to soon hit 8%, a level last seen in 2000.

An increase in borrowing costs would not just raise the cost of servicing the $32.7 trillion national debt; significant markdowns prices of legacy bonds and an inability by borrowers to service them due to economic slowdown could crush the loan portfolios of struggling banks and make them go the way of the dodo, such as the Silicon Valley Bank and the First Republic Bank.

Hence, it is unsurprising that Moody’s has cut ratings of 10 U.S. banks and put some big names on downgrade watch, and HSBC Asset Management’s warning that a U.S. recession is coming this year, with Europe to follow in 2024 is gaining credibility with each passing day.

With a material risk that an apparently resilient economy could find itself regressing into a full-blown recession just as Jerome Powell’s colleagues at the Federal Reserve have stopped forecasting it, seasoned investors could be wise to seek refuge in anti-fragile assets which could see upside potential in the event of a turmoil.

Since a devaluation in domestic currency brightens the prospects of exports, one of the ways to navigate the terrain is to bet on U.S. companies generating international sales, which could benefit from an uptick in earnings.

Secondly, since the value of gold has usually been negatively correlated to the global reserve currency, the demand for yellow metal from central banks worldwide totaled 1,136 tons in 2022.

In view of the above, here are a few financial instruments that could be worthy of consideration:

QUALCOMM Incorporated (QCOM)

QCOM is engaged in developing and commercializing foundational technologies for the global wireless industry. The company operates through three segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI).

Over the past three years, QCOM’s revenue has grown at a 24.5% CAGR, while its EBITDA has grown at a 34.4% CAGR. During the same time horizon, the company has been able to increase its net income at 46.4% CAGR.

On July 14, QCOM announced its quarterly cash dividend of $0.80 per common share, payable on September 21, 2023, to stockholders of record at the close of business on August 31, 2023.

QCOM pays $3.20 annually as dividends. Its 4-year average dividend yield is 2.32%. The company has been able to increase its dividend payouts for the past 19 years and at a 5.5% CAGR for the past five years.

For the fiscal third quarter that ended June 25, QCOM’s non-GAAP revenues came in at $8.44 billion, with QCT automotive posting an 11th straight quarter of double-digit revenue growth, while its non-GAAP net income amounted to $2.16 billion, or $1.87 per share.

Analysts expect QCOM’s revenue and EPS for the fiscal fourth quarter to exhibit marginal sequential increases to come in at $8.50 billion and $1.90, respectively. It corresponds to the midpoint of the company’s guidance for the quarter. Moreover, QCOM has met or exceeded consensus EPS estimates in three of the trailing four quarters.

Schlumberger N.V. (SLB)

As a global technology company, SLB primarily offers oilfield services to national oil companies, integrated oil companies, and independent operators. The company operates through four segments: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.

SLB has grown its revenue and EBITDA at 1.8% and 7% CAGRs, respectively.

On July 26, SLB and Eni S.p.A. (E), through its subsidiary Enivibes, announced an alliance to deploy e-vpms® (Eni Vibroacoustic Pipeline Monitoring System) technology. The new proprietary pipeline integrity technology, capable of providing real-time analysis, monitoring, and leak detection for pipelines around the world, can be retrofitted to any pipeline, regardless of age.

The system would be capable of providing real-time analysis, monitoring, and leak detection for pipelines around the world.

On July 6. SLB announced that it had been awarded a five-year contract by Petroleo Brasileiro S.A.- Petrobras (PBR) for enterprise-wide deployment of its Delfi™ digital platform. The award represents one of PBR’s largest investments in cloud-based technologies and sets the foundation for it to achieve its decarbonization and net-zero targets. 

During the fiscal 2023 second quarter that ended June 30, SLB’s revenue increased by 19.6% year-over-year to $8.10 billion. The company’s adjusted EBITDA increased by 28.2% year-over-year to $1.96 billion during the same period. Consequently, its non-GAAP net income increased by 44% year-over-year to $1.03 billion and $0.72 per share.

Analysts expect SLB’s revenue and EPS for the fiscal third quarter to increase by 11.6% and 23.8% year-over-year to $8.35 billion and $0.78, respectively. The company has also impressed by surpassing consensus EPS estimates in each of the trailing four quarters.

SPDR Gold Trust ETF (GLD)

GLD is a world-renowned ETF launched and managed by World Gold Trust Services, LLC. It offers investors exposure to gold, which has of late become an important component of their asset allocation strategy by acting as a hedge against volatility in equity markets, inflation, and dollar depreciation.

With $56.10 billion in AUM, all of GLD’s holdings are in gold bullion, stored in secure vaults. The physically-backed nature of this product insulates this product from the uncertainties introduced through futures-based strategies.

GLD has an expense ratio of 0.40%, lower than the category average of 0.47%. The fund’s net inflow came in at $6.82 billion over the past five years. It has a beta of 0.15.

AFLAC Incorporated (AFL)

AFLAC is involved in the marketing and administration of supplemental health and life insurance. The company operates through two subsidiaries: American Family Life Assurance Company of Columbus (Aflac) and Aflac Life Insurance Japan Ltd. (ALIJ), which belong to the Aflac U.S.  and Aflac Japan segments, respectively.

Over the past three years, AFL has grown its EBITDA and net income at 6.6% and 16.1% CAGRs, respectively.

On July 25, AFL launched its new product, Aflac Group Life Term to 120, to provide worksite life insurance, flexible living benefits, and affordable rates that won't increase across employees' lifespans. With flexible living benefits designed to make it easy to use whenever needed, the product assures customers of financial protection when needed.

During the fiscal 2023 second quarter that ended June 30, AFL’s total revenues came in at $5.17 billion, while its adjusted earnings excluding current period foreign currency impact increased by 3.6% and 10.2% year-over-year to come in at $979 million, or $1.62 per share, respectively.

Analysts expect AFL’s EPS for the fiscal third quarter to increase by 27% year-over-year to come in at $1.46. Moreover, the company has impressed by surpassing consensus EPS estimates in each of the

In addition to its robust financials, the relative immunity of its demand and margins to potential economic downturns make it an attractive investment option for solid risk-adjusted returns.

VanEck Vectors Gold Miners ETF (GDX)

GDX is managed by Van Eck Associates Corporation. It offers exposure to some of the largest gold mining companies in the world. Since their stocks strongly correlate to prevailing gold prices, the ETF provides indirect exposure to gold prices.

GDX has an expense ratio of 0.51%. It pays $0.48 annually as dividends, and its payouts have grown at a 22% CAGR over the past five years. It saw a net inflow of $68.53 million over the past month. The ETF has a beta of 0.77.

GDX has about $11.71 billion in assets under management (AUM). The ETF’s top holding is Newmont Corporation (NEM) which has a 10.04% weighting in the fund. It is followed by Barrick Gold Corporation (GOLD) at 9.04% and Franco-Nevada Corporation (FNV) at 8.31%. The fund has 52 holdings, with 61.81% of its assets concentrated in the top 10 holdings.