If you’re looking for an ASX ETF in the International shares sector, chances are, the VanEck Vectors Gold Miners ETF (ASX: GDX) is an ETF you’re considering.
How Australian investors can use the GDX ETF
The VanEck GDX ETF gives investors exposure to companies from around the world which are involved primarily in gold mining.
GDX exceeds our minimum market cap (FUM) criteria
As at the end of last month, the GDX ETF had $256.52 million of money invested. Given GDX’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the International shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
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Don’t forget GDX fees
With a yearly management fee of 0.53% charged by VanEck, if you invested $2,000 in the GDX ETF for a full year you could expect to pay management fees of around $10.60. This does not include any performance fees earned by the ETF’s manager for doing a good job. For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.54% or around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
In addition to a yearly management fee, there are other costs investors must consider, including brokerage and taxes. A specific cost for ETF and mFund investors to consider is the buy-sell spread, which is the slippage or ‘invisible’ cost paid by an investor when he or she buys or sells the ETF. For the GDX ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.43%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was below the average ETF spread of 0.51%, so that’s a good thing.
Takeaway
If you’re weighing up the GDX ETF, keep in mind that this is just a brief introduction to the ETF. Indeed, before doing anything, take a look at our free VanEck GDX report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the International shares sector, to do a good comparison.
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