Best Precious Metals ETFs for Q4 2022

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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 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 IAUM, GLDM, and SGOL.
  • The sole holding of each of these ETFs is gold bullion.

There are 15 precious metals ETFs that trade in the U.S., 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 underperformed the broader U.S. equity market over the past 12 months, providing a total return of -3.5% compared to the S&P 500’s total return of -2.5%, as of Aug. 17, 2022. The best-performing precious metals ETF, based on performance over the past year, is the iShares Gold Trust Micro ETF (IAUM).

We examine the three best precious metals ETFs below. All numbers are as of Aug. 18, 2022. In order to focus on the funds’ investment strategy, the top holdings listed for each ETF exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.

  • Performance Over One-Year: -1.5%
  • Expense Ratio: 0.15%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 85,547
  • Assets Under Management: $1.1 billion
  • Inception Date: June 15, 2021
  • Issuer: BlackRock Financial Management

IAUM tracks the London Bullion Market Association (LBMA) Gold Price, providing exposure to daily price movements of gold bullion. The ETF’s gold bars are held in vaults. Since IAUM is regarded as a collectible, investors should know that any long-term gains will have significant tax liabilities. The sole holding of IAUM is gold bullion.

  • Performance Over One-Year: -1.6%
  • Expense Ratio: 0.10%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 1,733,950
  • Assets Under Management: $5.2 billion
  • Inception Date: June 25, 2018
  • Issuer: World Gold Council

GLDM aims to reflect the performance of the price of gold minus fund expenses. The ETF is structured as a grantor trust, which may provide investors with a certain degree of tax protection. GLDM has a lower expense ratio than many other alternative precious metal commodity ETFs. Like IAUM, GLDM tracks the London Bullion Market Association (LBMA) Gold Price as a benchmark. It provides a cost-effective and convenient way for investors to invest in gold. The sole holding of the fund is gold bullion.

  • Performance Over One-Year: -1.6%
  • Expense Ratio: 0.17%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 1,095,450
  • Assets Under Management: $2.4 billion
  • Inception Date: Sept. 9, 2009
  • Issuer: Abrdn PLC

SGOL is structured as a grantor trust that seeks to track the performance of the price of gold bullion minus fund expenses. While the ETF is more expensive than GLDM and IAUM have lower expense ratio’s’, SGOL’s is still lower 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.

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.

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