Precious metals are a distinct asset class that many investors use to hedge other investments they may hold, such as stocks and bonds. This is because precious metals are often considered “safe harbor” assets to which investors flock when uncertain times afflict other markets.
As a stand-alone investment, precious metals can be a bit volatile for the average investor. This is because unlike stocks, which rise and fall based on earnings and future projections, precious metals typically fall based on harder-to-predict factors such as inflation, market sentiment and speculation.
5 Best Precious Metals ETFs
Exchange-traded funds are often a good place to start for the average investor looking to own some precious metals. While no single precious metals ETF is “the best,” on the whole they offer a wide variety of ways to access the asset class.
Here’s a look at some that you may wish to discuss with your financial advisor about adding to your portfolio.
1. iShares Gold Trust Micro ETF (IAUM)
- Assets: $956.75 million
- Expense ratio: 0.09%
- Year to date returns: 6.37%
One of the first precious metals ETFs that many investors look to is the iShares Gold Trust Micro ETF. Those first dipping their toe into the world of precious metals often start with gold, as it is the most familiar. This makes IAUM a good place to start, as it solely invests in gold bullion.
Minus fees and expenses, you can expect your investment in IAUM to closely track the daily price of solid gold. With nearly $1 billion in assets under management, the fund is able to keep its position as the lowest-cost physical gold ETF on the market, with an expense ratio of just 0.09% annually.
2. Franklin Responsibly Sourced Gold ETF (FGLD)
- Assets: $100.07 million
- Expense ratio: 0.15%
- Year to date returns: 6.35%
The Franklin Responsibly Sourced Gold ETF is another gold bullion ETF, but it takes a slightly different approach to its market. As its name implies, FGLD isn’t allowed to invest in certain types of gold.
Specifically, the bullion found in the ETF’s asset base must be sourced from refiners accredited by the London Bullion Market Association, or LBMA. To be accredited, refiners must take steps to combat terrorist financing, money laundering and human rights abuses, in addition to respecting the environment. Beyond that, the fund is a standard gold bullion ETF, with an annual expense ratio of 0.15%.
3. iShares MSCI Global Metals & Mining Producers ETF (PICK)
- Assets: $1.54 billion
- Expense ratio: 0.39%
- Year to date returns: -0.76%
If you’re looking for a bit more diversification with your precious metals ETF, the iShares MSCI Global Metals & Mining Producers ETF might be more up your alley. As the name suggests, this ETF takes a global approach to precious metals and also includes mining producers.
But one interesting twist with this ETF is that it specifically excludes miners of gold and silver, thus providing investors access to a different segment of the precious metals market. PICK holds more than $1.5 billion in assets, but its global diversification bumps up its expense ratio a bit, to 0.39%.
4. SPDR S&P Metals & Mining ETF (XME)
- Assets: $2.59 billion
- Expense ratio: 0.35%
- Year to date returns: 2.37%
In addition to silver and gold stocks, the SPDR S&P Metals & Mining ETF provides investors with exposure to companies mining everything from copper and aluminum to coal and steel. Specifically, the fund’s goal is to track the performance of the metals and mining segment of the S&P Total Market Index.
The fund typically holds about 30-35 companies, and it equally weights them in its portfolio. The ETF currently has a current expense ratio of 0.35%.
5. VanEck Rare Earth/Strategic Metals ETF (REMX)
- Assets: $642.03 million
- Expense ratio: 0.53%
- Year to date returns: 1.00%
VanEck might not be the most well-known mutual fund company to the average investor, but those in the precious metals world have relied on the company’s expertise in gold and other precious metals for over 50 years. The VanEck Rare Earth/Strategic Metals ETF offers an unusual opportunity for investors to gain exposure to metals that are often the by-products of precious- or base-metal mining, such as cerium, manganese, tungsten and titanium.
Rare earth and strategic metals are used for everything from aircraft and electronics to hybrid cars and flat-screen televisions. REMX has an expense ratio of 0.53%.
The Bottom Line
Investing in precious metals can be volatile, and it’s not for everyone. Using an ETF allows investors to focus on the specific areas of the precious metals market in which they’re interested without having to deal with storing their own gold bullion or selecting a specific foreign miner, for example. But you’ll have to do some homework, because not every well-known mutual fund company offers a precious metals ETF.
Before you invest in any of the ETFs listed above, be sure to speak with a financial advisor regarding your investment objectives and risk tolerance.
FAQHere are some quick answers to common questions about investing in precious metals.
- Which precious metals ETF is best?
- The best precious metals ETFs include:
- – iShares Gold Trust Micro ETF (IAUM)
- – Franklin Responsibly Sourced Gold ETF (FGLD)
- – iShares MSCI Global Metals & Mining Producers ETF (PICK)
- – SPDR S&P Metals & Mining ETF (XME)
- – VanEck Rare Earth/Strategic Metals ETF (REMX)
- Before you invest in these or any other ETFs, it's a good idea to consult with a financial advisor to make sure your selection fits your portfolio.
- The best precious metals ETFs include:
- Does Vanguard have a precious metals ETF?
- No, Vanguard does not have an ETF that specifically invests in precious metals. However, it does offer the Vanguard Global Capital Cycles Fund (VGPMX), which invests at least 25% of its capital in precious metals and mining securities.
- What is the best way to invest in precious metals?
- The best way to invest in precious metals – especially if you're just starting out – is to choose a precious metals ETF. They're an easy way into the market and highly liquid, so you'll be able to sell quickly if you choose.
- They also reduce some of the risk involved with investing, because they spread your funds over multiple securities. If one stock does poorly, the others may keep your investment afloat.
Information is accurate as of March 22, 2023, and is subject to change.
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