Precious Metal ETFs Offer Contrasting Profiles
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The iShares MSCI Global Silver and Metals Miners ETF (SLVP) and SPDR Gold Shares (GLD) differ in their underlying exposures, risk profiles, and recent performance. SLVP tracks a basket of global silver and metals mining companies, while GLD offers direct exposure to physical gold bullion. This comparison explores the cost, returns, volatility, and portfolio makeup of each ETF for investors considering a precious metals allocation.
Why it matters
Precious metals can serve different investing goals, with gold often viewed as a store of value and silver more volatile but used in various industrial processes. Investors looking to add precious metals exposure have to weigh the tradeoffs between stability and potential upside when choosing between a gold bullion fund like GLD and a silver/metals miners fund like SLVP.
The details
SLVP and GLD have nearly identical expense ratios around 0.4%, so cost is unlikely to be a major factor. However, the funds differ sharply in their risk and return profiles. Over the past 5 years, SLVP has seen a maximum drawdown of 56.18% compared to 22% for GLD, but also delivered a 155.9% one-year return versus 49.92% for GLD. This reflects SLVP’s exposure to the more volatile silver mining stocks versus GLD’s direct gold bullion holdings.
The players
SPDR Gold Shares
An ETF that provides direct exposure to physical gold bullion, offering investors a straightforward way to gain gold exposure without handling the physical commodity. With over $155 billion in assets under management and more than 21 years on the market, it stands out for its scale and liquidity.
iShares MSCI Global Silver and Metals Miners ETF
An ETF that tracks a basket of global silver and metals mining companies, introducing company-specific risks and opportunities not present in a pure commodity ETF. Its top holdings include Hecla Mining, Fresnillo Plc, and Industrias Penoles.
The takeaway
Investors looking to add precious metals exposure to their portfolios must weigh the tradeoffs between stability and potential upside when choosing between a gold bullion fund like GLD and a silver/metals miners fund like SLVP. GLD offers a lower-volatility way to participate in gold price movements, while SLVP provides more exposure to the upside potential of the mining sector but with greater risk.
