Precious Metals Investing: PPLT's Simple Platinum Access vs. SIL's Mining Holdings

The Global X - Silver Miners ETF (NYSEMKT:SIL) and abrdn Physical Platinum Shares ETF (NYSEMKT:PPLT) differ most in their underlying exposure: SIL invests in silver mining companies, while PPLT offers direct access to physical platinum, with PPLT carrying a lower expense ratio and lower risk profile.

Both SIL and PPLT target precious metals, but take fundamentally different approaches. SIL provides equity exposure to a portfolio of global silver miners, while PPLT is designed for investors seeking direct, cost-effective platinum exposure. This comparison highlights their cost, performance, risk, and portfolio construction differences to help clarify which may appeal depending on investor goals.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

While both funds are relatively costly for ETFs, PPLT is marginally more affordable with a 0.6% expense ratio versus 0.65% for SIL. Yield is not a factor in this comparison, as PPLT does not pay dividends.

Performance & risk comparison

What's inside

PPLT is a physically backed ETF that tracks the price of platinum bullion, providing exposure without the operational or credit risk of mining companies. With $2.86 billion in assets under management and a 16-year track record, it offers a simple, direct approach to platinum investing, though it does not report a sector breakdown or individual holdings since it holds only platinum itself.

SIL, on the other hand, invests exclusively in basic materials, specifically the silver mining industry. Its portfolio includes 39 global mining stocks, with top positions in Wheaton Precious Metals Corp (NYSE:WPM), Pan American Silver Corp (NYSE:PAAS), and Coeur Mining (NYSE:CDE). This structure introduces company-specific risk and potential for dividend income, but also exposure to broader equity market swings.

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What this means for investors

When you’re investing in precious metals, you have options. One thing to decide on is which precious metal you want to hold. Platinum, for example, is scarcer than gold or silver, and also has industrial uses, in particular in the automotive industry. Silver also has industrial demand in the technology and green energy markets, as well as in other uses such as jewelry making. In general, precious metals are often seen as smart investments to hedge against inflation and as part of a well diversified portfolio.

Another consideration is how you want to invest. In this instance, the PPLT ETF is physically backed by and tracks the price of platinum bullion. That means, if you have confidence that the price of platinum will rise over time due to its scarcity, industrial uses, or other reasons, it might be a smart investment for you.

On the other hand, the SIL ETF invests in global mining stocks. This can come with more rewards, like a 1.18% dividend yield or the prospect of big gains when these basic materials companies do well. But investing in these companies also introduces more factors, like balance sheet management and the costs to build and maintain the mines themselves.

Both of these investments have outperformed the S&P 500 on a total return basis over the last year, and if you’re interested in metals investing as a hedge against inflation or a path to diversification, there’s no reason not to consider both of these options. Just make sure you understand the underlying holdings, and do some research into the economic sectors that create the most demand for each material.

Glossary

ETF (Exchange-Traded Fund): Investment fund trading on stock exchanges, holding a basket of assets.
Expense ratio: Annual fund fee, expressed as a percentage of assets, covering management and operating costs.
AUM (Assets Under Management): Total market value of all assets managed by a fund or investment firm.
Beta: Measure of an investment’s volatility compared with a benchmark index, typically the S&P 500.
Max drawdown: Largest peak-to-trough decline in an investment’s value over a specific period.
Total return: Investment performance including price changes plus any income, such as dividends or interest.
Physically backed ETF: Fund that holds the underlying physical commodity, like bullion, rather than futures or derivatives.
Underlying exposure: The specific assets or sectors a fund invests in, which drive its performance and risk.
Portfolio construction: How a fund selects, weights, and diversifies its holdings to achieve its investment objective.
Equity exposure: Portion of an investment allocated to stocks, subject to stock market risks and returns.
Sector breakdown: Classification of a fund’s holdings by industry or sector to show where investments are concentrated.
Dividend income: Cash payments distributed by companies to shareholders, typically from profits.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.