Silver exchange-traded funds (ETFs) closely track the price of silver and are generally more liquid than owning the precious metal itself. Like other precious metals, silver tends to be favored by investors seeking a hedge against inflation or a safe haven in times of market turmoil.
Silver ETFs are generally structured as grantor trusts, a typical structure for funds whose assets are a single commodity held physically in a vault. This grantor trust structure means that each share of ownership in the ETF corresponds to a specific quantity of the underlying silver, making silver ETFs a convenient option for investors wanting to own physical bullion without the hassle of insuring and storing the metal themselves. Note that these ETFs hold silver or silver futures, not stocks of companies that mine silver.
Key Takeaways
- Silver has drastically underperformed the broader equity market over the past year.
- The three U.S. silver exchange-traded funds (ETFs), ranked according to one-year trailing total returns, are SIVR, SLV, and DBS.
- The only holding of SIVR and SLV is silver, and the holdings of DBS are silver futures.
There are three silver ETFs that trade in the United States, excluding leveraged and inverse ETFs. These ETFs trade the silver commodity, as opposed to ETFs that trade silver-mining companies. Silver has dramatically underperformed the market in the past year, with the S&P GSCI Silver index providing a one-year trailing total return of -8.9% compared with 28.9% for the S&P 500, as of Dec. 9, 2021. The best-performing silver ETF is the Aberdeen Standard Physical Silver Shares ETF (SIVR).
Below, we look at the best three silver ETFs, ranked by one-year trailing total returns. All numbers below are as of Dec. 13, 2021.
ETFs with very low assets under management (AUM)—less than $50 million—usually have lower liquidity than larger ETFs. This can result in higher trading costs that can negate some of your investment gains or increase your losses.
- Performance Over One-Year: -8.0%
- Expense Ratio: 0.30%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 593,205
- Assets Under Management: $960.4 million
- Inception Date: July 20, 2009
- Issuer: Abrdn PLC
SIVR is a grantor trust that is 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 and precious metals 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 One-Year: -8.2%
- Expense Ratio: 0.50%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 25,702,672
- Assets Under Management: $12.3 billion
- Inception Date: April 21, 2006
- Issuer: BlackRock Financial Management
SLV is a grantor trust holding physical silver on behalf of investors. It tracks the price set by the London Bullion Market Association.
The fund’s objectives include providing investors with an inflation hedge and 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.
The single holding of SLV is silver.
- Performance Over One-Year: -9.8%
- Expense Ratio: 0.75%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 5,220
- Assets Under Management: $18.6 million
- Inception Date: Jan. 5, 2007
- Issuer: Invesco
DBS is structured as a commodity pool, a private investment tool structured to combine investor contributions for trading futures and commodities markets. Unlike SIVR and SLV, the fund is designed to give investors an easy way to invest in silver futures.
The fund tracks the DBIQ Optimum Yield Silver Index Excess Return. This rules-based index seeks to track the price of silver futures plus the interest income of the fund’s holdings in U.S. Treasuries and money market securities. Because it is exposed to futures contracts, DBS is subject to the risks associated with backwardation and contango.
The fund’s holdings are silver futures.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
Source: Investopedia
