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Which Platinum ETF Is Right For You? (PPLT, PTM, PGM)

September 21st, 2012

Daniela Pylypczak: Although not as popular as its precious metal competitors gold and silver, platinum has surely made a name for itself in the investing world. This rare metal is one of the most expensive exchange-traded metals on the market and has been catching investors’ interests thanks to its wide variety of uses. Platinum is best known for its use in the automobile industry: half of the supply of platinum goes towards creating emission control devices for automobiles [for more platinum news and analysis subscribe to our free newsletter].

Platinum’s high price tag combined with its healthy trading volumes makes it one of the most popular investment tools in the commodities space. And thanks to the development of the exchange-traded fund industry, investors now have several ways to gain access to this rare and highly coveted precious metal. Below, we outline the three most popular platinum ETFs and which one will fit your investment objectives.

Physical Platinum Shares (NYSEARCA:PPLT)


Quick Stats (9/20/2012)

PPLT is the largest and one of the most popular options available for investors looking to gain exposure to the lucrative world of platinum investing. Since inception in 2010, the fund has amassed more than $878 million in total assets under management and currently maintains an ADV of 141,000. PPLT is designed to track the spot price of platinum bullion by holding bars of the metal in a secure vault. Since the fund invests in physical bullion, holders of PPLT can easily gain access to the precious metal without having to deal with the complexities and nuances of futures trading. Additionally, PPLT’s appeal also comes from its relatively cheap cost with its expense ratio at only 60 basis points [see also Four Little Known Factors Driving The Price Of Platinum].

PPLT is Right for You if: You are an investor seeking to gain exposure to platinum, but want to avoid the nuances of futures trading. 

E-TRACS UBS Long Platinum ETN (NYSEARCA:PTM)

Quick Stats (9/20/2012)

UBS’s PTM is one of the most popular exchange-traded products available on the market, offering investors exposure to platinum through the futures market. The fund tracks an index which is designed to measure the collateralized returns from a basket of platinum futures contracts. PTM focuses on the near-term portion of the futures curve, with underlying contracts targeted for a constant maturity of three months. It should be noted that the fund is relatively small in comparison to PPLT which may be undesirable to some investors. PTM is also structured as an exchange-traded note, meaning investors will be exposed to the potential credit risk of the issuing  institution.

PTM is Right for You if: You are an investor looking to achieve platinum futures exposure, but want a methodology that helps avoid the adverse affects of contango.

DJ UBS Platinum Trust Sub-Index ETN (NYSEARCA:PGM)

Quick Stats (9/20/2012)

PGM is another option for investors looking to gain exposure to platinum prices through the use of futures contracts. Unlike PTM however, PGM tracks an index that consists of only one futures contract on the precious metal and will be much more susceptible to contango as a result. PGM’s low asset base and weak daily volume make it a candidate for being shut down in the coming years if it is unable to gain more traction with investors.[see also How To Trade Platinum Futures].

PGM is Right for You if: You are an investor looking to gain exposure to platinum prices through the use of futures-based funds.

Written By Daniela Pylypczak From CommodityHQ  Disclosure: No Positions.

CommodityHQ offers educational content, analysis, and commentary on global commodity markets. Whether you’re looking to speculate on a short-term jump in crude or establish a long-term allocation to natural resources, CommodityHQ has the information you need.


NYSE:PGM, NYSE:PPLT, NYSE:PTM


 

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