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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 significantly underperformed the broader U.S. stock market over the past year.
- The three platinum exchange-traded funds (ETFs) that trade in the United States, ranked by one-year trailing total returns, are PPLT, PLTM, 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 United States. They are aimed at tracking 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 significantly underperformed the broader market over the past 12 months. The index has provided one-year trailing total returns of -5.8% compared to the S&P 500’s total return of 27.9%, as of Nov. 30, 2021. The best-performing platinum ETF, based on performance over the past year, is the Aberdeen Standard Physical Platinum Shares ETF (PPLT). Below, we examine the three platinum ETFs that trade in the United States. All numbers below are as of Nov. 30, 2021.
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: -4.0%
- Expense Ratio: 0.60%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 122,252
- Assets Under Management: $1.2 billion
- Inception Date: Jan. 8, 2010
- Issuer: Abrdn plc
PPLT is structured as a grantor trust, whose goal is to track the spot price of platinum after deducting the fund’s expenses. 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 located in London.
- One-Year Trailing Total Return: -4.2%
- Expense Ratio: 0.50%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 40,037
- Assets Under Management: $35.7 million
- Inception Date: Jan. 22, 2018
- Issuer: GraniteShares
Like PPLT, PLTM is structured as a grantor trust, which is backed by physical platinum held in a vault. The vault is located in London and is inspected twice per year. 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.
- One-Year Trailing Total Return: -6.7%
- Expense Ratio: 0.45%
- Annual Dividend Yield: N/A
- Three-Month Average Daily Volume: 588
- Assets Under Management: $5.0 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, trading costs are likely to be higher compared to more liquid investments.
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