As of the end of March, there were 4,915 exchange-traded products (ETPs), including exchange-traded funds (ETFs), listed on U.S. exchanges. That’s a big universe, one that seemingly grows daily. That vast population also ensures some ETFs are mirror images of competing funds.
A familiar example is the landscape of market capitalization-weighted S&P 500 ETFs. The titans of this space all do the same thing: track the S&P 500, with only branding and expense ratios differing.
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Such similarities are also found in the commodities ETF realm, particularly in the somewhat dense gold ETF segment, where a sizable number of funds provide investors with exposure to physical bullion. Again, the only differences are the fund issuers, fees, and, in the gold example, the issuer’s storage of the yellow metal.
Silver, often viewed as gold’s “little brother,” is part of this scenario, too. Just look at the iShares Silver Trust (NYSEMKT: SLV) and the abrdn Physical Silver Shares ETF (NYSEMKT: SIVR), both of which provide exposure to, you guessed it, physical silver. But which one is better?
Making a golden choice with silver ETFs
Enthusiasm for silver ETFs is palpable. Buoyed by rising demand for the commodity from renewable energy and data centers, silver prices surged over the past year, helping both of these silver-tracking ETFs more than double in value over that time. Adding to the white metal’s potency is the fact that demand is outstripping supply because miners can’t get enough product to market fast enough.
Indeed, there’s some good news above, but it doesn’t solve the riddle of how to choose between the iShares ETF and its Aberdeen rival (Aberdeen is the issuer and “abrdn” is a brand). Fortunately, investors, particularly those wanting to own silver for the long term, don’t have to stretch to get an answer. In comparing two ETFs that do the same thing, the deciding factor often boils down to fees.
Data confirm that, across stocks, bonds, and even gold ETFs, investors consistently and overwhelmingly lean toward the cheapest funds. If you’re in that camp, deciding between the two silver ETFs is easy. The iShares fund charges 0.5% per year, or $50 on a $10,000 investment, while its Aberdeen rival charges 0.3% annually. As the chart below indicates, those savings add up after awhile.
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