A closed-end fund for silver managed by Sprott Asset Management
LP of Canada that trades at a premium has outperformed a rival
exchange traded fund (ETF) in 2011.
Sprott Physical Silver Trust (NYSEArca: PSLV)
is up 47.6% so far this year through April 18, according to
iShares Silver Trust (NYSEArca: SLV)
The performance disparity may be partly explained by the fact
that the Sprott silver trust is a closed-end fund, and is trading
at a premium to net asset value (
) of more than 20%.
Some observers speculate the premium is fueled by a unique
feature of Sprott Physical Silver Trust that allows shareholders to
redeem large chunks in exchange for physical delivery of silver
The iShares Silver Trust has a so-called ETF arbitrage mechanism
that generally keeps the price of a share close to NAV. In other
words, it doesn't see the premiums and discounts that sometimes
appear in closed-end funds.
Sprott Physical Silver Trust has total assets of $972.4 million,
according to Sprott, compared with $15.2 billion for iShares Silver
Sprott Physical Silver Trust
Full disclosure: Tom Lydon's clients own SLV.