Platinum is regarded as an important precious metal by many investors, though it’s less commonly talked about than gold and silver. Many investors use platinum as either a hedge against inflation or a safe haven in troubling economic times. Platinum is also valuable as an industrial metal, used in the manufacturing of products such as cars, jewelry, and electronics.
To gain exposure to the metal, investors may purchase platinum bars or coins, platinum futures contracts, or shares of platinum mining companies. Another option is a platinum exchange-traded fund (ETF). This instrument tends to be more liquid than holding the physical commodity and does not require paying related storage or insurance costs.
Key Takeaways
- Platinum prices have underperformed the broader U.S. stock market over the past year.
- The three platinum exchange-traded funds (ETFs) that trade in the U.S, ranked by one-year trailing total returns, are PLTM, PPLT, and PGM.
- These ETFs are backed by either physical platinum or platinum futures contracts.
There are two main types of platinum ETFs for investors to choose from:
- The first is structured as a grantor trust, which means that the fund holds physical bullion in its vaults and then administers the buying, storage, and sale of that bullion on behalf of the trust’s owners.
- The second common structure is what’s called an exchange-traded note (ETN). These products are unsecured debt securities that track an underlying index and trade on a major exchange in the same manner as a stock. Platinum ETNs invest in futures contracts that track the price of the metal, as opposed to holding it in physical form.
There are three distinct platinum ETFs that trade in the U.S. Their goal is to track the price of platinum by holding the physical metal or through futures contracts and do not hold shares of platinum mining companies. The benchmark S&P GSCI Platinum Index has underperformed the broader market over the past 12 months. The index has provided one-year trailing total returns of -19.1% compared with the S&P 500’s total return of -11.0%, as of Sept. 1, 2022. The best-performing platinum ETF, based on performance over the past year, is the GraniteShares Platinum Trust (PLTM).
Below, we examine the three platinum ETFs that trade in the U.S. All numbers below are as of Sept. 2, 2022. In order to focus on the funds’ investment strategy, the top holdings listed for each ETF exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.
ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs, which can negate some of your investment gains or increase your losses.
- One-Year Trailing Total Return: -16.0%
- Expense Ratio: 0.50%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 34,843
- Assets Under Management: $38.5 million
- Inception Date: Jan. 22, 2018
- Issuer: GraniteShares
PLTM is structured as a grantor trust aiming to track the spot price of platinum less fund expenses. The fund is backed by physical platinum held in a vault. The vault is located in London and is inspected twice per year. Lending of the metal is not permitted, and the trust is not allowed to hold derivatives. The goal of the fund is to provide a cost-effective way to invest in platinum by tracking the price of the platinum spot market, less the fund’s expenses. In addition to the auto industry, platinum is used in biomedical research, specialty electronics, and specialty manufacturing. PLTM is listed on NYSE Arca and can be traded through an investor’s brokerage account.
- One-Year Trailing Total Return: -16.8%
- Expense Ratio: 0.60%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 105,669
- Assets Under Management: $924.1 million
- Inception Date: Jan. 8, 2010
- Issuer: Abrdn PLC
Like PLTM, PPLT is structured as a grantor trust, whose goal is to track the spot price of platinum after deducting the fund’s expenses. The ETF trades on the NYSE Arca electronic exchange. PPLT prices platinum off of the London Platinum and Palladium Market’s specifications for good delivery. The fund is backed by physical platinum held in secure vaults in London and Zurich. Investors should note that platinum prices are closely tied to the global automobile industry and can be highly cyclical.
iPath Series B Bloomberg Platinum Subindex Total Return ETN (PGM)
- One-Year Trailing Total Return: -18.0%
- Expense Ratio: 0.45%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 1,018
- Assets Under Management: $4.6 million
- Inception Date: Jan. 17, 2018
- Issuer: Barclays Capital
PGM is the only platinum fund structured as an ETN, as described above. The fund is designed to provide exposure to the Bloomberg Platinum Subindex Total Return. Rather than being backed by physical platinum, the fund invests in futures contracts. Due to PGM’s extremely low trading volume, overall trading costs are likely to be higher compared to more liquid investments. The ETN’s primary exchange is the NYSE Arca.
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