Home News 3 Platinum ETFs for Q4 2022

3 Platinum ETFs for Q4 2022

by SuperiorInvest

Platinum is considered important precious metal by many investors, although it is less talked about than gold and silver. Many investors use platinum as either a Hedge against inflation or a a safe haven in troubled economic times. Platinum it is also valuable as an industrial metal, used in the manufacture of products such as automobiles, jewelry, and electronics.

To gain exposure to the metal, investors can buy platinum bars or coins, platinum futures contracts, or shares of platinum mining companies. Another option is platinum exchange traded fund (ETF). This instrument tends to be more liquid than holding a physical commodity and does not require the payment of associated storage or insurance costs.

Key things

  • Platinum prices have underperformed the broader US stock market over the past year.
  • The three US-traded platinum exchange-traded funds (ETFs), ranked by total one-year returns, are PLTM, PPLT, and PGM.
  • These ETFs are backed by either physical platinum or platinum futures contracts.

Investors can choose from two main types of platinum ETFs:

  • The first is structured as a trust fundmeaning the fund holds physical bullion in its vaults and then manages the purchase, storage and sale of these precious metals on behalf of the trust’s owners.
  • The second common structure is what is called an exchange traded note (ETN). These products are unsecured debt securities that track an underlying index and trade on a major exchange in the same way as stocks. Platinum ETNs invest in futures contracts which track the price of the metal, as opposed to holding it in physical form.

There are three distinct platinum ETFs that trade in the US. Their goal is to track the price of platinum by holding the physical metal or through futures contracts and not to hold shares of platinum mining companies. The benchmark The S&P GSCI Platinum Index has underperformed the broader market over the past 12 months. The index provided one-year trailing total returns of -19.1% compared to the S&P 500 total return of -11.0% as of September 1, 2022. The top-performing platinum ETF based on performance over the past year is GraniteShares Platinum Trust (PLTM).

Below we look at three platinum ETFs that trade in the US. All numbers below are as of September 2, 2022. In order to focus on the Funds’ investment strategy, the best holdings listed for each ETF exclude cash holdings and holdings purchased with the proceeds of securities lending, except in unusual cases such as an exceptionally large portion of cash.

ETF with very low assets under management (AUM)less than $50 million, they usually have lower liquidity than larger ETFs. This may result in higher trading costs, which may negate some of your investment gains or increase your losses.

  • Total return in one year: -16.0%
  • Expense ratio: 0.50%
  • Annual Dividend Yield: N/A
  • Three-month average daily volume: 34,843
  • Assets under management: $38.5 million
  • Start date: January 22, 2018
  • Issuer: GraniteShares

PLTM is structured as a grant fund that aims to track the immediate price of platinum net of fund expenses. The fund is backed by physical platinum stored in a safe. The vault is located in London and is inspected twice a year. Borrowing of the metal is not permitted and the trust may not hold derivatives. The objective of the fund is to provide a cost-effective way to invest in platinum by tracking the spot market price of platinum net of fund expenses. In addition to the automotive industry, platinum is used in biomedical research, specialty electronics, and specialty manufacturing. PLTM is listed on NYSE Arca and can be traded through an investor’s brokerage account.

  • Total return in one year: -16.8%
  • Expense ratio: 0.60%
  • Annual Dividend Yield: N/A
  • Three-month average daily volume: 105,669
  • Assets under management: $924.1 million
  • Start date: January 8, 2010
  • Issuer: Abrdn PLC

Like PLTM, PPLT is structured as a grantor trust that aims to track the spot price of platinum net of fund expenses. The ETF is traded on the NYSE Arca electronic exchange. PPLT platinum prices outside London platinum and palladium market specifications good delivery. The fund is backed by physical platinum stored in secure vaults in London and Zurich. Investors should note that platinum prices are closely tied to the global automotive industry and can be highly cyclical.

iPath Series B Bloomberg Platinum Subindex Total Return ETN (PGM)

  • Total return in one year: -18.0%
  • Expense ratio: 0.45%
  • Annual Dividend Yield: N/A
  • Three-month average daily volume: 1,018
  • Assets under management: $4.6 million
  • Start date: January 17, 2018
  • Issuer: Barclays Capital

PGM is the only platinum fund structured as an ETN as described above. The fund is designed to provide exposure to the Bloomberg Platinum Subindex Total Return. Rather than being backed by physical platinum, the fund invests in futures contracts. Due to the extremely low volume of PGM trades, overall trading costs are likely to be higher compared to more liquid investments. The primary exchange for ETNs is NYSE Arca.

The comments, opinions and analysis expressed herein are for informational purposes only and should not be construed as individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information contained herein to be reliable, we do not guarantee its accuracy or completeness. The opinions 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 analysis contained in our content are provided as of the date of publication and are subject to change without notice. The material is not intended to be a complete analysis of all material facts relating to any country, region, market, industry, investment or strategy.

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