6 silver ETFs at a glance
W.he gold is the undisputed safe haven in turbulent times, its white metallic cousin silver deserves attention. Like gold, silver is one of the most sought-after commodities in uncertain times and is often viewed as a protection against inflation. However, since most of the demand for silver comes from industrial use, its price is more dependent on underlying demand and the industry’s prospects.
From solar panels and LED lighting to touchscreens, RFID tags and cellular technology, silver is an indispensable component in many industries. The industrial use of silver accounts for about 60% of the annual demand. Currently 80% of the total demand for silver is met by mining and the remainder by recycling.
Here’s an overview of the different types of Exchange Traded Funds (ETFs) that are a convenient and hassle-free way to invest in silver.
the iShares Silver Trust (SLV) is the oldest and largest ETF that offers the opportunity to invest in silver. The ETF replicates the silver price and is compared to the LBMA silver price. The underlying structure of the company is that of a grantor trust that holds physical silver and issues stocks. The Trust issues and returns iShares only in blocks of 50,000 or integer multiples thereof, and a block of 50,000 iShares is called a “basket”. At the time of its inception in 2005, an initial silver insert was made in exchange for the issue of three baskets. The trust only holds physical silver and currently has 547,261,733.50 ounces of silver. The ETF has $ 13.03 billion under management and an expense ratio of 0.50%.
Aberdeen Standard Physical Silver Shares ETF (SIVR) was launched in July 2009. Aberdeen Standard Physical Silver Shares ETF is issued by the Aberdeen Standard Silver ETF Trust, which, like SLV, is a grantor trust according to its legal structure. The trust holds allocated physical silver bars in secure vaults that are checked at regular intervals. SIVR does not indulge in futures and only holds physical silver. It is compared to the London Silver Price. The ETF currently has $ 1.01 billion in assets under management and one issue relationship of 0.30%.
While iShares and Aberdeen ETFs are backed by physical silver held by the custodian on behalf of the trust, there are other variations in silver ETFs as well.
Invesco DB Silver Fund (DBS) has a different structure. The Invesco DB Silver Fund, launched in 2007, largely tracks the development of the DBIQ Optimum Yield Silver Index Excess Return Index. The index is a rules-based index consisting of futures contracts on silver. DBS offers investors exposure to commodity futures and is associated with a higher degree of risk and therefore not suitable for all investors. The ETF has $ 20.65 million under management and an expense ratio of 0.76%.
Additionally, there is an ETF that does not track the price of silver but instead invests in a number of silver mining companies. the Global X Silver Miners ETF (SIL) offers exposure to companies engaged in the exploration, mining and refining of silver. The ETF tracks the total return of Solactive Global Silver Miners indexconsisting of a minimum of 20 and a maximum of 40 members weighted according to the free float market capitalization. By mirroring the index, the ETF invests companies that are active in silver mining in regions such as Canada, Russia, USA, South Korea, Great Britain, Peru, Mexico and Australia. The ETF was launched in 2010 and currently has $ 1.12 billion in assets under management and an expense ratio of 0.65%.
There are two other ETFs that belong to the leveraged ETF category. ProShares Ultra Silver (AGQ) aims (on a daily basis) to double the daily performance of the Bloomberg Silver Subindex. The fund, launched in 2008, currently manages $ 480.34 million in assets and has an expense ratio of 0.95%. ProShares UltraShort Silver (ZSL) is an inversely leveraged ETF. The program aims to deliver twice the inverse (-2x) the daily performance of the Bloomberg Silver sub-index.
While silver is more than a precious metal due to its extensive use in fast-growing industries, silver trades thinly and is sometimes more volatile compared to gold. Since the beginning of the year, silver has left the broader indices dramatically behind. The metal is currently down almost 12%. Investors who understand the dynamics of the metal can add silver as a portfolio diversifier.
Disclaimer: The author has no position in the stocks mentioned. Investors should not view the above information as a factual recommendation but as an idea for further consideration. The report has been carefully prepared and all exclusions or reporting errors are unintentional. The ETF-specific information like AUM and stocks is on November 25th, 2021. Leveraged and Inverse ETFs are much riskier than regular ETFs.
The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.