SIL vs. SLV: How They’ve Performed So Far In 2012

So far this year, investors that have held silver assets are outperforming the market as a whole. There are a number of exchange traded funds, or ETFs that offer broad exposure to the precious metal, and most are up more than the S&P 500 index. Two of the primary silver ETFs are the iShares Silver Trust (SLV) and Global X Silver Miners ETF (SIL). Despite their slightly different focus, their performance in 2012 is quite close, though it had diverged until very recently. Below is an overview of each ETF and a comparison of their performance on a year-to-date basis [for more silver ETF news and analysis subscribe to our free newsletter].

iShares Silver Trust (SLV)

The stated objective of the iShares Silver Trust is “for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust’s expenses and liabilities.” In other words, it is meant to mirror how physical silver performs after subtracting out the 0.50% expense ratio and any other related fees detailed in its prospectus. It was first opened in 2006 and has grown to $10.4 billion in assets, which makes it one of the most liquid avenues to invest in silver.

Global X Silver Miners ETF (SIL)

The Global X Silver Miners ETF takes a slightly different route to help investors invest in silver. Its stated goal is to “to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Silver Miners Index.” It is much smaller than the iShares Silver Trust, with less than $390 million in total assets. It also has a slightly higher expense ratio of 0.65%. The top five holdings are:

  1. Silver Wheaton Corporation
  2. Fresnillo PLC
  3. Industrias Peñoles, S. A.B. de C. V.
  4. Pan American Silver Corporation
  5. Hecla Mining Company

These five companies account for more than half of the overall ETF, which means its fortunes are tied very closely with how these companies perform. Of course, they are silver miners so are driven primarily by how silver as a commodity performs [see also Jim Rogers: Silver Is a Better Investment Than Gold].

And the Winner is…

Thus far in 2012, the iShares Silver Trust is up 17.8% while the Global X Silver Miners ETF is up 16.4%. Clearly, there are periods where the performance will differ. A primary reason for this is that Silver Miners ETF has a number of firm-specific implications. For instance, an individual company could have an internal issue, such as an accident at a mine or significant silver find, that could cause its individual stock to trade much differently than silver. Again, this performance should track closely over time, but there are company benefits and drawbacks to consider with the Miners ETF.

Bottom Line

For investors interested in more pure silver exposure, the iShares Silver Trust represents a highly liquid opportunity. Those that might have some insight into the specific silver miners in the industry, including the top five in the Silver Miners ETF, might consider this route.

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Disclosure: No positions at time of writing.

About Ryan Fuhrmann

Ryan Fuhrmann, CFA, is a freelance financial writer and investor. He settled on a pursuit of investing after taking a class entitled "Security Analysis" while at the University of Wisconsin-Madison and has since adopted a value-based philosophy toward the markets. His work and interviews have been quoted in the press and investment publications including "Barron's" and local business journals. Ryan is also an advisor to Butler University's student managed investment portfolio and co-hosts the Smart Money Show on Saturday mornings on Freedom 95.9 WFDM in Indianapolis.
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