Mining ETFs Win in Turbulent April With Double-Digit Gains

Wall Street is on track for its worst month in 2024 as growing inflation fears and escalating geopolitical tensions weigh on investors' sentiment. With just a day left in the month, the S&P 500 dropped 2.7%, potentially its sharpest decline since September 2023. The Nasdaq Composite experienced a 2.4% decrease, setting it on course for its worst performance since October 2023. Meanwhile, the Dow Jones Industrial Average declined 3.8%, marking its most significant monthly drop since February 2023, per Dow Jones Market Data.
The decline has been broad-based. Still, a few corners of the broad market, especially mining, have gained. The uncertainty around Fed rate hikes and the current geopolitical situation has brought back the allure of metals, boosting their demand. In particular, two precious metals — gold and silver — have been rising on safe-haven demand as both are considered as a store of wealth for investors. They are often used as a means of preserving wealth during times of financial and political uncertainty and usually do well when other asset classes struggle. Factors such as the forthcoming U.S. presidential election, the ongoing Russia-Ukraine war and the Israel-Hamas conflict enhance both metals' attractiveness to investors.
Copper and aluminum, the most used industrial metals, have also gained substantially this month on tightening supply conditions and a resurgence in manufacturing activity in the world's largest economies like the United States and China leading to a surge in demand. The Western ban on Russian metals, hopes of rate cuts, and diversification of holdings of central banks also uplifted the sentiments.
Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge gains than their bullion cousins in a rising metal market. We have highlighted the five best ETFs from these metal mining sectors. These include Global X Silver Miners ETF SIL, iShares Copper and Metals Mining ETF ICOP, USCF Aluminum Strategy Fund ALUM, Sprott Nickel Miners ETF NIKL and iShares MSCI Global Gold Miners ETF RING.
Let's dig into the details of these ETFs:
Global X Silver Miners ETF SIL – Up 16.6%
Global X Silver Miners ETF provides investors access to a broad range of silver mining companies by tracking the Solactive Global Silver Miners Total Return Index. It holds 32 stocks in its basket with double-digit concentration on the top two firms. Global X Silver Miners ETF has managed assets worth $1 billion and trades in a good volume of about 664,000 shares a day. It charges 65 bps in annual fees.
iShares Copper and Metals Mining ETF (ICOP) – Up 13.5%
iShares Copper and Metals Mining ETF offers exposure to 35 global copper and metal ore miners who may benefit from increased demand for this limited resource. It follows the STOXX Global Copper and Metals Mining Index, charging investors 47 bps in annual fees. iShares Copper and Metals Mining ETF has gathered only $15.8 million in its asset base and trades in a lower average volume of 19,000 shares a day.
USCF Aluminum Strategy Fund ALUM – Up 11.1%
USCF Aluminum Strategy Fund is an actively managed fund that seeks to provide exposure to the price of aluminum through aluminum-based derivatives investments. The fund primarily invests in aluminum futures. However, in order to gain the desired economic exposure, it may also invest in cash-settled options, forward contracts, options on futures contracts, and other options. USCF Aluminum Strategy Fund has accumulated $2.5 million in its asset base and charges 65 bps in annual fees. It trades in a paltry average daily volume of under 100 shares.
Sprott Nickel Miners ETF (NIKL) – Up 11.1%
Sprott Nickel Miners ETF provides exposure to the global securities in the nickel industry, including nickel producers, developers and explorers, by tracking the Nasdaq Sprott Nickel Miners Index. It holds 22 stocks in its basket, with Indonesian firms making up the largest share at 32.4%, followed by Australia (29.9%) and Canada (15.8%). Sprott Nickel Miners ETF has accumulated $7.2 million in its asset base and trades in average daily volume of 17,000 shares. It charges 75 bps in annual fees.
iShares MSCI Global Gold Miners ETF RING – Up 10.6%
iShares MSCI Global Gold Miners ETF offers exposure to companies that derive the majority of their revenues from gold mining. It follows the MSCI ACWI Select Gold Miners Investable Market Index and holds 36 securities in its portfolio. Canadian firms take more than half of the portfolio, while the United States takes the next spot at 21.1% share. RING is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. It has been able to manage assets worth $485.4 million and trades in a good volume of 130,000 shares per day.

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