Silver has always been a popular investment option due to its role as a safe haven asset. With the rise of exchange-traded funds (ETFs), investing in silver has become even easier for Canadians. However, with so many silver ETFs available, choosing the right one for your investment goals can be overwhelming.
This article will take a closer look at the top silver ETFs in Canada. Whether you’re a seasoned investor or just starting, this guide will help you make an informed decision.
We will analyze each ETF’s performance, fees, and other vital factors to help you find the best one for your portfolio. So, let’s dive into the world of silver ETFs and discover the top options available in Canada.
Top Silver ETFs in Canada
Silver ETFs are a popular investment choice for those looking to gain exposure to the silver market, and Canada offers various options for investors. Here is a rundown of some of Canada’s best silver commodity ETFs based on their assets under management (AUM), trading volume, and other vital factors.
iShares Silver Bullion ETF (SVR)
This ETF seeks to expose investors to the performance of the price of silver bullion and fewer expenses and fees by holding physical silver bullion. It has an AUM of over $1.3 billion and an average daily trading volume of around 65,000 shares.
Purpose Silver Bullion Fund (SBT)
This ETF invests primarily in physical silver bullion, focusing on minimizing tracking errors and expenses. It aims to provide investors with exposure to the performance of the price of silver bullion, less costs and fees. As of April 2023, it has an AUM of over $120 million and an average daily trading volume of over 6,000 shares.
BMO Silver ETF (ZSL)
This ETF seeks to replicate the performance of the Solactive Silver Bullion Pure Beta TR Index, which reflects the price of silver bullion, by investing in physical silver bullion and using derivative contracts. As of April 2023, it has an AUM of over $40 million and an average daily trading volume of over 8,000 shares.
Horizons Silver ETF (HUZ)
This ETF seeks to replicate the performance of the Solactive Silver Front Month MD Rolling Futures Index, which reflects the returns of a rolling position in silver futures contracts, by investing in silver futures contracts. As of April 2023, it has an AUM of over $7 million and an average daily trading volume of over 2,000 shares.
Types of Silver ETFs
There are generally two types of silver ETFs that you can buy:
Physical Silver ETFs
These ETFs hold physical silver bullion, typically in the form of bars or coins, and aim to track the price of silver. Physical silver ETFs usually incur expenses related to storage, insurance, and transportation of the physical silver.
Synthetic Silver ETFs
These ETFs use financial derivatives, such as futures contracts or options, to track the price of silver rather than holding physical silver. As a result, synthetic silver ETFs may have lower expenses than physical silver ETFs. Still, they also carry some risks related to using derivatives, such as counterparty risk and tracking error.
Both physical and synthetic silver ETFs provide investors with exposure to the price of silver, which can be used for diversification or as a hedge against inflation or currency devaluation.
Are There ETFs of Silver Companies?
Some ETFs invest in companies primarily engaged in mining, exploring, producing, or refining silver. These ETFs are often referred to as silver mining or producer ETFs.
Here are a few examples of silver company ETFs:
Global X Silver Miners ETF (SIL)
This ETF invests in companies that are primarily engaged in the mining of silver. The fund’s holdings are spread across multiple countries and regions, including Canada, Mexico, Peru, and the United States. As of April 2023, SIL had an AUM of over $1 billion and an average daily trading volume of over 500,000 shares.
iShares MSCI Global Silver Miners ETF (SLVP)
This ETF invests in companies that derive at least 50% of their revenue from mining silver and other precious metals. The fund’s holdings are spread across multiple countries and regions, including Canada, Australia, and the United States. As of April 2023, SLVP had an AUM of over $400 million and an average daily trading volume of over 50,000 shares.
ETFMG Prime Junior Silver Miners ETF (SILJ)
This ETF invests in small-cap companies that are primarily engaged in the mining of silver, as well as other precious metals. The fund’s holdings focus on junior mining companies, which may offer more significant growth potential but carry higher risks. As of April 2023, SILJ had an AUM of over $100 million and an average daily trading volume of over 500,000 shares.
What are the benefits of investing in Silver ETFs?
There are several potential benefits to investing in silver ETFs in Canada. Here are a few:
Diversification: Investing in silver ETFs can provide diversification to an investment portfolio. This is because the price of silver is not necessarily correlated with other asset classes, such as stocks or bonds. As a result, adding silver ETFs to a portfolio can potentially reduce overall portfolio risk.
Exposure to silver: Silver ETFs provide investors with exposure to the price of silver without physically owning the metal. This can be more convenient than purchasing and storing physical silver and allows investors to trade silver more easily.
Low expenses: Silver ETFs generally have lower fees than actively managed mutual funds, making them an affordable option for investors.
Liquidity: Silver ETFs are traded on stock exchanges, which means they can be bought and sold quickly, like any other stock. This makes them a more liquid investment than physical silver, which may be harder to sell.
Tax efficiency: Silver ETFs can be more tax-efficient than physical silver or silver mining stocks, as they may be subject to lower capital gains tax rates and may not be subject to the exact reporting requirements.
Similar Alternatives to Silver ETFs
Several investments are similar to silver ETFs regarding their potential benefits and risks. Here are a few examples:
Like silver ETFs, gold ETFs provide exposure to the price of gold without physically owning the metal. Gold is also considered a safe-haven asset and can potentially diversify an investment portfolio.
Precious Metals Funds
These ETFs invest in various precious metals, such as gold, silver, platinum, and palladium. As a result, they may provide broader exposure to the precious metals market than single-metal ETFs. Canadian rare earth metals stocks are another option.
Mining ETFs invest in companies engaged in mining, exploring, producing, or refining precious metals. It comprises the number of silver and mining stocks in each ETF and the total holdings of each share. These ETFs can expose the precious metals market through the companies that have and sell the metals.
These ETFs invest in various commodities, including metals like steel stocks in Canada, agricultural products, and energy. Like precious metals ETFs, commodity ETFs can potentially provide diversification to an investment portfolio and exposure to the commodities market.