Gold vs. Silver Miners: Silver Miners ETF Outperforms Gold Peers

iShares MSCI Global Silver and Metals Miners ETF (NYSEMKT:SLVP) offers broad exposure to silver and higher yields, whereas Sprott Gold Miners ETF (NYSEMKT:SGDM) provides concentrated exposure to North American gold producers.

Gold and silver miners often move in tandem but represent different industrial and monetary use cases. While SLVP targets the silver space globally, SGDM hones in on North American gold production. This analysis breaks down their differences in cost, liquidity, and underlying assets to help determine which strategy fits a given portfolio.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Expense ratios are a recurring drag on returns, and here the iShares fund has a slight advantage. Its 0.39% expense ratio is 0.07 percentage points lower than the 0.46% fee charged by the Sprott fund. Additionally, the iShares fund offers a higher payout for income-seeking investors, with a 2.3% yield compared to its gold-mining peer's 1.1%.

Performance & risk comparison

What's inside

Sprott Gold Miners ETF specifically targets gold-producing companies in the United States and Canada, and generally commits at least 90% of its assets to these securities. This non-diversified strategy includes 48 holdings. Its largest positions include Agnico Eagle Mines (NYSE:AEM) at 9.88%, Newmont (NYSE:NEM) at 7.95%, and Barrick Mining (TSX:ABX) at 7.64%. The fund consists entirely of basic materials (100%). It was launched in 2014. Sprott Gold Miners ETF has paid $0.73 per share over the trailing 12 months, which, on its recent ~$67.4 share price, works out to a 1.1% yield.

iShares MSCI Global Silver and Metals Miners ETF mirrors an index of global company stocks chiefly involved in silver exploration or the mining of other metals. The portfolio contains 36 holdings, and its largest positions include Hecla Mining (NYSE:HL)at 13.50%, Indust Penoles at 11.80%, and First Majestic Silver (TSX:AG) at 10.14%. Its sector allocation is 100% metals and mining with no cash or derivatives. It was launched in 2012. iShares MSCI Global Silver and Metals Miners ETF has paid $0.70 per share over the trailing 12 months, which, on its recent ~$30.3 share price, works out to a 2.3% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

When comparing the iShares MSCI Global Silver and Metals Miners ETF (SLVP) and the Sprott Gold Miners ETF (SGDM), investors should consider several key factors. Let's see what they tell us about each fund.

First, we should examine each fund's strategy. SLVP is a fund focused on silver miners, holding about 35 stocks, mostly North American-based. SGDM, by contrast, focuses on gold miners. It holds about 50 stocks that are listed on major U.S. and Canadian stock exchanges.

Two other important factors are historical performance and income potential. Over the last five years, SLVP has generated a total return of 137%, equating to a compound annual growth rate (CAGR) of 18.8%. SGDM, on the other hand, has delivered a total return of 171%, with a 22% CAGR. Both funds have outperformed the S&P 500 over the last five years. Moreover, since the funds hold mining stocks, rather than bullion, each fund generates income. SLVP has a dividend yield of 2.3%, while SGDM's is a more modest 1.1%.

One final factor to weigh is cost. SLVP has the lower annual expense ratio of 0.39%, while SGDM's is 0.46%. For context, if a person invested $10,000 into each fund, they should expect to pay $39 in annual fees for their SLVP shares but $46 for their SGDM shares.

In summary, SLVP and SGDM are both metals ETFs, but they differ in many key respects. SLVP has generated higher returns over the last five years, has a lower expense ratio, and offers a higher dividend yield. Therefore, in a head-to-head matchup, many investors may favor SLVP over SGDM. Yet, SGDM has performed well, and it may appeal to investors who are more bullish on gold's prospects than on silver's.

Jake Lerch 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.