With gold hitting record highs and silver rising to multi-year highs, Bank of America has identified four exchange-traded funds (ETFs) that offer attractive exposure to the precious metals. Top-rated ETFs include abrdn Physical Silver Equity ETF (ticker SIVR), iShares Silver Trust (SLV), Invesco DB Precious Metals Fund (DBP), and abrdn Physical Precious Metals Basket Equity ETF (GLTR). Bank of America rated all four ETFs “more attractive” compared to other ETFs with similar assets. Wall Street banks have also given “positive” ratings to the industries represented by ETFs. The funds reflect a basket of physical precious metals, with varying allocations to silver, gold, palladium and platinum. Bank of America research also shows that since 1945, a portfolio with 40% exposure to broad commodities would have outperformed a portfolio with 40% U.S. Treasuries by 0.8% per year. , but long-term commodity returns remain near historic lows, according to Bank of America. In the 1970s, annual returns on commodity indexes were 20%, and between the 1990s and 2000s average returns were 5-10%, but returns after the global financial crisis were the lowest on record since the Great Depression. Bank of America believes commodities are about to return to the mean, with its ETF strategist Jared Woodard adding, “Commodities remain at historic lows relative to financial assets, and the ratio is likely to move higher as the shift toward financial assets continues.” 5%. abrdn Physical Silver Stock ETF SIVR is the cheapest silver fund under Bank of America’s coverage, with a total expense ratio of 0.50%. The Bank of America commodities team is also bullish on silver, predicting spot prices will reach $26.46 per ounce by the end of 2024 and $32.50 per ounce by the end of next year. As of the end of last week, it was trading at $30.50 an ounce. Bank of America strategists say, “Silver markets have rebalanced based on production discipline and demand from new applications including solar panels.” @SI.1 According to Bank of America, 1Y Line iShares Silver Trust SLV Although AUM Greater than SIVR, but can provide higher liquidity and lower bid-ask spreads for investors who prioritize liquidity. SLV SIVR 1Y Line Invesco DB Precious Metals Fund DBP, 80% allocated to gold and 20% allocated to silver, is also favored by the bank’s commodity team. However, it is also the most expensive ETF selected by Bank of America, with a total expense ratio of 0.77%. “DBP’s high weighting to gold allows it to outperform GLTR,” the Bank of America strategist said. abrdn Real Precious Metals Basket Equity ETF GLTR offers a more diversified portfolio with more than 60% in gold and more than 20% in Silver, the remaining 10% is platinum and palladium. “The fund contains (more than) 60% gold and (more than) 20% silver, and our commodities team is bullish on both,” Bank of America said. “We believe palladium and platinum are underweighted to generate substance. Impact.” —CNBC’s Michael Bloom contributed reporting.
