Exchange-traded funds, or ETFs, have existed since 1993, although it took 15 more years for the first actively managed ETF to reach the market.
Since then, ETFs have risen in popularity in large part because they are a cheaper investment option than traditional mutual funds. Today, a huge number of ETFs are in play. ETF shares focus on a variety of spaces, such as derivatives, bonds and commodities.
Within the commodity space are silver ETFs, and investors interested in these have many options to choose from. For instance, some ETFs focus solely on physical silver bullion, while others focus on silver futures contracts. Still others focus on the silver-mining market itself.
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Many individuals gravitate towards silver ETFs over a silver mutual fund because mutual funds can only be bought or sold at the close of the trading day, while silver ETFs offer more flexibility as they can be traded whenever the stock market is open.
In order to determine which silver ETF will best suit their precious metals needs, investors should examine the options available to them. Here’s a brief look at five silver ETFs you may want to consider when expanding your portfolio.
1. iShares Silver Trust (ARCA:SLV)
As the iShares Silver Trust’s website warns, it is not your standard ETF. Why? Put simply, the iShares Silver Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool under the Commodity Exchange Act. Further, its ETF shares aren’t subject to the regulatory requirements that apply to mutual funds.
Investors who are not put off by those conditions may find the iShares Silver Trust appealing. It uses the London Bullion Market Association silver price as its benchmark and holds silver bullion — 16,043.02 tonnes as of July 10, 2020. Its net asset value clocks in at US$9,680,229,408, and since its inception it has achieved an average annual return of 2.21 percent for its investors.
2. Sprott Physical Silver Trust (ARCA:PSLV)
The Sprott Physical Silver Trust is also different from a typical ETF. It’s geared at investors who want to hold physical ounces of silver, and had a total net asset value of US$1,498,410,228 as of July 10, 2020.
Silver stocks held by the Sprott Physical Silver Trust are stored at a secure third party location in Canada and are subject to periodic inspections. Investors who own a certain value equivalent in dollars can redeem their units for physical silver each month, and it can be delivered nearly anywhere in the world via armored carrier. The Sprott Physical Silver Trust only invests in London Good Delivery physical silver bullion, less 3 percent of net assets devoted to expenses and anticipated redemptions.
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3. Horizons Silver ETF (TSX:HUZ)
Established in June 2009, the Horizons Silver ETF seeks to deliver to investors results that mirror the performance of the COMEX silver futures contract for the subsequent delivery month. The silver ETF is denominated in Canadian dollars, and for that reason can in most cases hedge any volatility that causes the US dollar gains and losses back into Canadian dollars.
The Horizons Silver ETF had net assets of C$15,838,794 as of July 10, 2020, with a management fee of 0.65 percent and a portfolio exposed entirely to the white metal.
4. Global X Silver Miners ETF (ARCA:SIL)
The Global X Silver Miners ETF gives investors access to many silver-mining companies. It benefits from the fact that those companies can enjoy quick gains when the price of the metal is rising. Given that it provides exposure to a basket of global silver miners, it also allows investors to avoid the risks associated with individual companies and lets them add geographical diversity to their portfolios.
As of July 10, 2020, the silver ETF’s net assets stood at US$739,014,030 and it had a total expense ratio of 0.66 percent at that time.
5. ETFMG Prime Junior Silver ETF (ARCA:SILJ)
The ETFMG Prime Junior Silver ETF bills itself as the “first and only ETF to target small cap silver miners.” The index provides a benchmark for investors to track public small-cap companies in the silver space.
The company’s investments span Canada, the US and the UK, with major holdings including First Majestic Silver (TSX:FR,NYSE:AG) and Pan American Silver (TSX:PAAS,NASDAQ:PAAS).
This is an updated version of an article originally published by the Investing News Network in 2014.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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