Higher-than-expected inflation numbers for August have compelled the Fed to announce another 75-basis-point interest rate hike today. After a third straight outsize interest rate hike, the central bank officials now predict the key rate to end 2022 between 4.25% to 4.5%.
Market volatility is rife, with CBOE Volatility Index up 56.5% year-to-date with speculations of a recession on the horizon. Bank of America’s Global Fund Manager Survey found that 58% of investors expect a recession in the coming 12 months. In concurrence, former U.S. treasury secretary Larry Summers has warned investors to prepare for a bumpy recession.
In addition to fueling market volatility, Fed’s hawkishness is also strengthening the U.S. dollar, thereby leading to significant drawdowns in the value of precious metals and making borrowing increasingly expensive for growing businesses.
VanEck Gold Miners ETF (GDX)
Van Eck Associates Corporation manages GDX. The fund offers investors indirect exposure to precious metals by investing in stocks of companies operating across materials, metals, and mining, gold, and silver sectors around the world.
GDX seeks to track the performance of the NYSE Arca Gold Miners Index by using the full replication technique. With $9.41 billion in AUM, GDX’s top holding is Newmont Corporation (NEM), which has a 13.15% weighting in the fund, followed by Barrick Gold Corporation (GOLD) at 10.32%, and Franco-Nevada Corporation (FNV) at 8.58%. It has a total of 49 holdings.
The fund’s 0.51% expense ratio compares to the category average of 0.48%. GDX has not paid any dividend for the past six quarters. Its fund flows came in at negative $505.28 million over the past month and negative $111.78 million over the past three months. It has a beta of 0.69.
TOP 10 STOCKS FOR THE YEAR AHEAD
Since the dollar has been gaining strength due to aggressive interest rate hikes by the Fed, GDX has lost 4.7% over the past month and 24% year-to-date to close the last trading session at $23.75. Its NAV was $23.75 as of September 20, 2022.
GDX’s POWR Ratings reflect its bleak prospects. It has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GDX has an F grade for Trade and a D for Buy & Hold and Peer. It is ranked #22 of 38 ETFs in the D-rated Precious Metals ETFs group.
Click here to see all GDX ratings.
ARK Innovation ETF (ARKK)
ARKK is the flagship actively managed fund from ARK Invest, an advisory firm led by renowned investor Catherine Wood. The fund seeks to generate long-term capital appreciation by investing in businesses across the globe that seeks to benefit from disruptive innovation.
With $8.05 billion in AUM, ARKK’s top holding is Tesla Inc. (TSLA), which has a 10.53% weighting in the fund, followed by Zoom Video Communications, Inc. Class A (ZM) at 7.9%, and Roku Inc. Class A (ROKU) at 7.78%. It has a total of 35 holdings.
The fund’s expense ratio is…
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