ETFS Keeps Its Silver ETF The Cheapest

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ETF Securities, the exchange-traded fund firm that began U.S. rollouts of its physical metal ETFs about a year ago, decided to hold the price of its ETFS Physical Silver Shares ETF (NYSEArca:SIVR) 40 percent below that of its arch rival for at least another year to help asset-gathering efforts.

SIVR, which launched on July 24, 2009, now has about $178 million in assets. ETFS is keeping in place the 0.30 percent price it calls a discount from a cap of 0.45 percent described in regulatory filings. By comparison, the iShares Silver Trust ETF (NYSEArca:SLV), which costs 0.50 percent a year, has assets of $5.35 billion. Both funds offer investors ownership of physical silver that's stored in vaults.

"We decided that we'd extend that period of discounting for another year to see if there's further asset growth," said Fred Jheon, managing director of product development at ETF Securities. "If it makes a difference, we'll continue the discount, and if there's not a difference, we do have a right to raise it back to 45 basis points."

ETF Securities' decision is the latest sign of price competition in the world of metals ETFs. Last month, iShares cut the price on its Comex Gold Trust (NYSEArca:IAU) by more than a third, undercutting both the SPDR Gold Shares ETF (NYSEArca:GLD) and ETF Securities' Physical Swiss Gold Shares (NYSEArca:SGOL). IAU costs 0.25 percent, versus 0.40 percent and 0.39 percent for GLD and SGOL, respectively.

Asked if ETFS might make the SIVR silver fund's expense rate 0.30 percent permanently, Jheon said it was a possibility, but not quite yet.

"We might do that," Jheon said. "But we're still the new kids on the block in terms of the ETF space here in the U.S., and it takes time for people to know us, know our products and ultimately use them.

"If we see continued asset growth in a year, it may be we'll just cap it at 0.30," he added.

Silver Heating Up?

Coincidentally, silver ETFs have been among the top performers recently as anxiety mounts about the durability of the U.S. economic recovery.

SIVR was the fifth-best performing ETF yesterday, rising 1.52 percent, according to data compiled by IndexUniverse.com. The ETF has gained almost 5 percent in the past month as investors fret about persistent unemployment and the threat of deflation.

SLV meanwhile was eighth on Monday's best-performers list, with a 1.47 percent gain, IndexUniverse.com data show.

Silver, like gold, constitutes a safe-haven role in investors' portfolios. But unlike gold, it has broad industrial uses in electronics, jewelry, aerospace and battery technologies that tie its performance to economic growth.

ETF Securities, which has offices in New York and London, has platinum and palladium ETFs in addition to SIVR and SOGL. The ETFS Physical Platinum Shares ETF (NYSEArca:PPLT) and the Physical Palladium Shares ETF (NYSEArca:PALL) also offer investors ownership of physical supplies of the commodities that are stored in vaults.

Don't forget to check IndexUniverse.com's ETF Data section.

Copyright ® 2010 Index Publications LLC . All Rights Reserved.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs


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