Precious Metals Plays: GDX Offers Broader Exposure and Less Volatility Than SLVP

Both iShares MSCI Global Silver and Metals Miners ETF (NYSEMKT:SLVP) and VanEck Gold Miners ETF (NYSEMKT:GDX) offer exposure to precious metals miners, but their approaches and portfolios set them apart. SLVP is a narrower, silver-centric exchange-traded fund (ETF), while GDX provides broader access to global gold miners. This comparison looks at cost, performance, risk, portfolio makeup, and trading details to help investors see which may better fit their objectives.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

Performance & risk comparison

What's inside

GDX is built for investors seeking exposure to global gold mining companies. It tracks a broad index of 55 holdings, including Agnico Eagle Mines Ltd, Newmont Corp, and Barrick Mining Corp, with its entire portfolio in basic materials. The fund’s nearly 20-year history and large assets under management (AUM) help support high liquidity and tight trading spreads.

SLVP, by contrast, holds 41 companies and leans heavily into silver and diversified metals miners, with basic materials making up 88% of assets. Its largest positions are Hecla Mining, Indust Penoles, and Fresnillo Plc. It is smaller and more concentrated, and offers a slightly different metals exposure profile.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

The VanEck Gold Miners ETF stands out for its broader portfolio and larger assets under management -- more than 33 times the assets of the iShares Silver and Metals Miners ETF. Its beta of 0.87 is also notable. Beta measures a stock's volatility relative to the market, usually using the S&P 500 as a benchmark. GDX's beta under 1 means the ETF is less volatile than the general market. This is often an argument for investing in the precious metals space, particularly gold, which is still considered a standard store of value. With the market being propelled higher by exciting tech stories in the last few years, and increasing economic and market uncertainty, parking some of your money in gold-related investments could prove to be a useful hedge against big swings.

Silver tends to be a more volatile investment due to the metal's industrial uses in things like electronics. It's performed better than GDX over the last year, perhaps due to the same tech-driven narrative that has lifted much of the market. However, over a five-year stretch, GDX leads SLVP in total returns, despite its slightly higher expense ratio.

Both of these ETFs also offer investors a bit of international exposure, which is another good way to diversify a portfolio. However, unlike tracking gold or silver directly, both of these ETFS are invested in companies that mine or process precious metals, meaning you're also taking on business-related risks and expenses involving building and buying mines and managing business financials.

For the average investor looking for precious metals exposure, GDX offers more stability, more robust assets, and a slight long-term performance edge over SLVP.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges and holds a basket of assets.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its current price.
Beta: A measure of a fund’s volatility compared to the overall market, typically the S&P 500.
AUM: Assets Under Management; the total market value of assets a fund manages.
Liquidity: How easily a fund or asset can be bought or sold without affecting its price.
Max drawdown: The largest observed percentage drop from a fund’s peak value to its lowest point over a period.
Basic materials: Companies involved in extracting or processing raw materials, such as metals and minerals.
Holdings: The individual stocks or assets owned by a fund.
Trading spreads: The difference between the bid and ask prices, reflecting transaction costs and market liquidity.
Index: A benchmark representing a group of securities used to track performance or guide fund holdings.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.