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Precious metals such as gold, silver, and platinum are valued by many investors as a hedge against inflation or a safe haven in times of economic turmoil. They also are valued for their rarity and their use in a broad range of industrial applications. Precious metals exchange-traded funds (ETFs) are a popular way to invest in these metals, either through physical or futures-based exposure. ETFs can offer a more liquid and easier approach to investing in precious metals than buying futures contracts, purchasing bullion, or buying stock in publicly traded companies involved in the exploration or production of these metals.
Key Takeaways
- The precious metals market has dramatically underperformed the broad U.S. equity market over the past year.
- The precious metals exchange-traded funds (ETFs) with the best one-year trailing total returns are PPLT, SIVR, and SLV.
- The sole holding of the first ETF is platinum bullion and the sole holding of each of the other two funds is silver bullion.
There are 15 precious metals ETFs that trade in the U.S., excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). These ETFs are invested in physical precious metals rather than in shares of precious metals mining companies. The benchmark S&P GSCI Precious Metals Index has significantly underperformed the broader market over the past 12 months, providing a total return of -1.9% versus the S&P 500’s total return of 33.9%, as of Nov. 9, 2021. The best-performing precious metals ETF for Q1 2022, based on performance over the past year, is the Aberdeen Standard Physical Platinum Shares ETF (PPLT). We examine the three best precious metals ETFs below. All numbers are as of Nov. 9, 2021.
- Performance Over One-Year: 22.0%
- Expense Ratio: 0.60%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 122,395
- Assets Under Management: $1.3 billion
- Inception Date: Jan. 8, 2010
- Issuer: abrdn (formerly Standard Life Aberdeen)
PPLT is structured as a grantor trust, providing some tax protection for investors. It is designed to track the spot price of platinum bullion. Platinum is a difficult precious metal for investors to access, and PPLT is one of the only options for platinum exposure aside from futures contracts, individual platinum coins, and shares of platinum mining companies. Platinum is also highly correlated with the automobile industry and thus tends to be very cyclical. PPLT’s platinum bullion is stored in vaults in London. The metal is held in allocated bars, and the bar list is posted daily.
- Performance over 1-Year: 0.3%
- Expense Ratio: 0.30%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 536,642
- Assets Under Management: $1.0 billion
- Inception Date: July 24, 2009
- Issuer: abrdn (formerly Standard Life Aberdeen)
SIVR is structured as a grantor trust, physically backed by silver bullion held in a vault on behalf of investors. Its objective is to track the performance of the price of silver less the expenses of the operations of the trust. Because it holds only physical silver, this fund does not utilize futures contracts. Like other silver ETFs, SIVR may be a useful safe haven during market uncertainty, but it may not be attractive as a long-term, buy-and-hold investment. The single holding of SIVR is silver.
- Performance over 1-Year: 0.1%
- Expense Ratio: 0.50%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 24,335,584
- Assets Under Management: $13.2 billion
- Inception Date: April 21, 2006
- Issuer: BlackRock Financial Management
Like SIVR, SLV is a grantor trust holding physical silver on behalf of investors. The trust provides investors with exposure to the daily movements of the price of silver bullion. Given that it does not utilize futures contracts, the fund is not subject to backwardation or contango. Like SIVR, it may be attractive to investors as a safe haven during market turbulence. The single holding of SLV is silver.