The Ultimate Investor Guide To Silver ETFs

Investors should note that since these products are extremely volatile, these are suitable only for traders. Additionally, the daily rebalancing—when combined with leverage—may make these products deviate significantly from their expected long-term performance figures.

Investors seeking exposure to a portfolio of commodity futures through a single investment may consider E-TRACS UBS Bloomberg CMCI Silver ETN (NYSEARCA:USV). The ETN seeks to replicate the performance of the UBS Bloomberg CMCI Silver Total Return index, net of fees and expenses. The product delivers collateralized returns from a basket of silver futures contracts, which are diversified across five constant maturities ranging from three months to three years.

This silver ETN is unpopular and attracted only $12 million in its asset base while charges 40 bps in annual fees from investors.

Equity-based Silver ETFs

The fund in this category mainly tracks the index consisting of silver mining and exploration companies. There are 3 ETFs available in this category:

Global X Silver Miners ETF (NYSEARCA:SIL)

The fund, issued by Global X in Apr 2010, seeks to match the price and yield of the Solactive Global Silver Miners index, before fees and expenses. The index measures the performance of the global companies that are actively engaged in some aspect of the silver mining industry, such as silver mining, refining, or exploration.

With holdings of 32 securities, the product is nearly 70% concentrated in the top 10 firms, which include Silver Wheaton (SLW), Fresnillo (FNLPF) and Industrias Penoles. The fund focuses on small cap companies, as these account for 55% of the total assets. In terms of country exposure, Canada takes the top position with 56% share while Mexico and U.S. round off to the next two spots with 23% and 15% share, respectively.

The product has attracted assets worth $210 million, while charging investors 65 bps in fees a year.

iShares MSCI Global Silver Miners Fund (NYSEARCA:SLVP)

This ETF tracks the MSCI ACWI Select Silver Miners Investable Market Index. This benchmark measures the performance of companies in both developed and emerging markets that derive the majority of their revenues from silver mining.

The product holds 31 stocks in its basket and is highly concentrated in its top 10 holdings. The top two firms – SLW and Industrias Penoles – make up for a respective 21.58% and 11.50% share. Other securities hold no less than 6.83% share in the basket.

Canadian companies take half of the portfolio while U.S. and Mexican companies get double-digit allocations with 18.09% and 11.50% share, respectively (read: Why Mexico ETF is a Long-term Winner).

The fund is unpopular with just $6.0 million in AUM and charges 39 bps in annual fees.

FactorShares PureFunds ISE Junior Silver ETF (NYSEARCA:SILJ)

This ETF follows the ISE Junior Silver Miners Index, holding 29 stocks in the portfolio. The stocks in the fund include silver mining exploration and production companies. It focuses on small cap securities.

The product puts roughly 64% of total assets in the top 10 holdings. Mag Silver (MVG), Fortuna Silver Mines (FSM) and Mandalay Resource are the top three elements in the basket.

Here again, Canada (84%) takes the top position in terms of country exposure. Firms from the U.S., Hong Kong, and China make up for the remaining positions in the basket.

The fund has AUM of $1.7 million and an expense ratio of 0.69%.

This article is brought to you courtesy of Eric Dutram.

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