Precious metals such as gold, silver, and platinum are valued by many investors as a hedge against inflation or a safe haven in times of economic turmoil. They also are valued for their rarity and their use in a broad range of industrial applications.
Precious metals exchange-traded funds (ETFs) are a popular way to invest in these metals, either through physical or futures-based exposure. ETFs can offer a more liquid and easier approach to investing in precious metals than buying futures contracts, purchasing bullion, or buying stock in publicly traded companies involved in the exploration or production of these metals.
Key Takeaways
- The precious metals market has dramatically underperformed the broad U.S. equity market over the past year.
- The precious metals exchange-traded funds (ETFs) with the best one-year trailing total returns are PALL, SGOL, and BAR.
- The sole holding of PALL is palladium bullion, and the sole holding of both SGOL and BAR is gold bullion.
There are 15 precious metals ETFs that trade in the United States, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). These ETFs are invested in physical precious metals rather than in shares of precious metals mining companies. The benchmark S&P GSCI Precious Metals Index has significantly underperformed the broader market over the past 12 months, providing a total return of -4.4% vs. the S&P 500’s total return of 17.0%, as of Jan. 27, 2022. The best-performing precious metals ETF, based on performance over the past year, is the Aberdeen Standard Physical Palladium Shares ETF (PALL).
We examine the three best precious metals ETFs below. All numbers are as of Jan. 27, 2022.
- Performance Over One-Year: 19.4%
- Expense Ratio: 0.60%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 41,892
- Assets Under Management: $391.6 million
- Inception Date: Jan. 6, 2010
- Issuer: Abrdn PLC
PALL is structured as a grantor trust, providing some tax protection for investors. It is designed to track the price of palladium, less fund expenses. Palladium has numerous applications, including in electronics and industrial products. It is a difficult precious metal for investors to gain exposure to because there are no pure palladium miners. PALL is one of the only options for palladium exposure other than futures contracts. The ETF’s sole holding is palladium bullion. PALL’s palladium bullion is stored in vaults in London.
- Performance Over One-Year: -2.6%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 1,082,995
- Assets Under Management: $2.5 billion
- Inception Date: Sept. 9, 2009
- Issuer: Abrdn PLC
SGOL is also structured as a grantor trust that seeks to track the performance of the price of gold bullion minus fund expenses. SGOL has a lower expense ratio than many other precious metals ETFs. The sole holding of the fund is gold bullion, which is stored in vaults in London and Zurich. A leading physical commodity auditor, Inspectorate International, inspects SGOL’s vaults twice a year.
- Performance Over One-Year: -2.6%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 270,583
- Assets Under Management: $919.9 million
- Inception Date: Aug. 31, 2017
- Issuer: GraniteShares
Like SGOL above, BAR seeks to track the performance of the price of gold bullion minus fund expenses. The ETF is also structured as a grantor trust. BAR is listed on NYSE Arca and can be traded through a normal brokerage account. Also, like SGOL above, BAR has a lower expense ratio than many other alternative precious metals ETFs. The sole holding of the fund is gold bullion, which is stored in vaults in London.
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. While 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.
