Dallas, Texas 12/10/2013 (Financialstrend) – Overview
Market Vectors Gold Miners ETF (NYSEARCA:GDX) is an Index linked exchange traded fund which has accumulated a market cap of $6.36 billion at the browsers. It has been an underperforming fund which has mirrored the deeper chinks in the larger gold mining industry as the global commodity prices in general and specifically gold and rare metals prices saw a dramatic dip in prices towards the middle of this year. Market Vectors Gold Miners ETF (NYSEARCA:GDX) has posted a earnings per share loss of $17.09 per share which is way off the charts in comparison to some of its peer funds. The continued weakness in the stock of this ETF can be gauged by the fact that only 58% of the total outstanding shares issued by the fund are held by institutional investors like pension fund operators. It has total shares outstanding of 307 million and beta metric of 0.46 which indicates the relative risk that investors on this ETF are facing.
Type of Fund
Market Vectors Gold Miners ETF (NYSEARCA:GDX) is an index linked fund which has attempted to mirror the price appreciation and the dividend yield from its investments which are in line with performance of NYSE Arca Gold Miners Index. This index has been tracking the stock of gold mining firms based on a market capitalization based weighted index. It consciously included a broad range of gold mining firms which include “small, mid sized and large capped” gold mining stock from across the globe.
Type of Holdings
Market Vectors Gold Miners ETF (NYSEARCA:GDX) fund has been attempting to plough in a minimum of 80 percent of its accumulated funds into the stocks and ADR of gold mining firms which are tracked by the index. In order to maximize its returns the fund uses a indexed, passive approach to select the stocks which will receive its backing. It has appointed a third party investment advisory firm Van Eck Associates Corporation as its in house advisor to help in administering its portfolio.
Performance
Market Vectors Gold Miners ETF (NYSEARCA:GDX) has been a laggard among the larger group of Gold ETF’s and stock of gold mining firms this year. It has managed to record 53.8 percent decrease in the valuation of the stock in the trailing 12 months. This continued weakness in the stock has resulted in a continued year round shrinking in the holdings of its share holders. In the past 6 months it has shed 28.7 percent and in the past month an equally troublesome 16.6 percent. In the past week of trading Market Vectors Gold Miners ETF (NYSEARCA:GDX) has managed to further reduce its share holder’s value by an alarming 7.27 percent. In spite of the huge struggle to maintain its market valuation, the ETF has paid out dividend of $0.42 per share which translates to a 2.03 percent dividend yield over the past year.
Conclusion
In my opinion, Market Vectors Gold Miners ETF (NYSEARCA:GDX) is an dead weight exchange traded fund which has struggled to retain investor confidence and has struggled continuously to return share holder value. Investors in the stock are better of cutting their losses by exiting the stock at this stage rather than risk further dilution of their holdings in the event of U.S Fed deciding to bite the bullet and start to roll back its market support in the form of tapering of federal incentives. This anticipated move by Fed assumes added weight in the light of better than expected unemployment rates in U.S and the broader increase in the consumption sentiment of U.S citizens as witnessed during the recently concluded Thanksgiving sales figures.
