What’s in your ETF?

There are some things to be aware of when buying ETFs, says John Stepek, as problems with one popular fund earlier this month revealed.

As passive investing pulls in ever more money from active funds, we're seeing plenty of scaremongering about the "dangers" of trackers and exchange-traded funds (ETFs). Much of this reflects the active fund industry's straw-clutching efforts to discredit low-cost rivals. But there are some things to be aware of, as problems with one popular ETF earlier this month revealed.

The VanEck Junior Gold Miners ETF (listed in both the US and the UK under the ticker GDXJ) tracks the MVIS Global Junior Gold Miners index (VanEck also owns the index provider, MVIS). As MoneyWeek readers probably know, gold miners have done very well since the start of 2016. As a result, this ETF has grown rapidly. It started 2016 with total assets of around $1bn. It's now worth more than $5bn partly due to rising share prices, but mainly due to the $3.3bn that has flooded into the ETF over that time.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.