The Best Silver ETFs In Canada for 2022
During market instability, investors often turn to precious metals like gold and silver. But there are logistical challenges involved with trading, let alone owning the physical bars. Gold and silver bullion are less liquid than cash or equities held in a brokerage account. There are also the costs associated with shipping and storing your investment.
For this reason, many Canadian investors have opted to purchase gold and silver inside Exchange-Traded Funds (ETFs). But with so many ETFs to choose from, how do you decide which one to buy? Do you know if they invest in real gold or silver? The answer might surprise you.
Recently, I published an article on the best gold ETFs in Canada. This time, it’s silver’s turn. In this article, I reveal what I believe are the top Canadian silver ETFs for 2022.
How to Invest In Silver In Canada
It’s never been easier to purchase physical silver. Some Canadian financial institutions will let you order silver bars or coins online and deliver them to your local branch for pickup a few days later. But you will pay a premium to do so.
If you are ok with not holding the actual silver bar in your hand, it’s much easier to buy and sell it in ETF form inside your online brokerage account. Silver ETFs have low MERs when compared to your average mutual fund, and they are, for the most part, highly liquid.
How Do Silver ETFs Work?
Not all silver ETFs invest in silver. That’s a key distinction you should make before investing. Some ETFs invest in silver futures, while others invest in companies that operate in the precious metals sector. In other words, they’re involved in the exploration or production of physical silver. Before you purchase a silver ETF, you need to decide what kind of exposure you want to have.
For this list, I favoured ETFs backed by real, physical silver bars. The funds employ a custodian, like the Canadian mint, or a major Canadian bank, to store the bars on behalf of the fund.
While ETFs are prized for their incredibly low management fees, silver ETF MERs tend to be higher than your average broad-index fund. The funds included on our list have MERs ranging from 0.40% to 0.78%. Still, if you use an online broker that doesn’t charge a trading fee for ETF purchases, the MER is a drop in the bucket when considering the liquidity and convenience of trading silver online.
Best Silver ETFs in Canada
Below are five silver ETFs worth considering in 2022. For this list, I favoured physical silver ETFs backed by physical bullion because they are perhaps the closest alternative to owning the real thing. When an ETF is backed by actual silver, the bars are stored by a third-party custodian, often a large Canadian bank. To mix things up, I added a silver futures ETF to the list, along with an equities ETF.
1. Sprott Physical Silver Trust
Our pick for the best Canadian silver ETF for 2022 is the Sprott Physical Silver Trust (PSLV), a closed-end trust that invests directly in silver bullion. The silver bars are unencumbered and fully allocated from London Good Deliver (LGD), and the custodian is none other than the Canadian Mint.
Investors who hold the required minimum can redeem ETF units for physical silver bars every month by completing a redemption form. The Assets Under Management exceed $3 billion, and the MER is a competitive, if not class-leading, 0.60%.
Inception Date: October 27, 2010
What We Like: Backed by silver bullion
2. IShares Silver Bullion ETF
IShares Silver Bullion ETF seeks to replicate the performance of the price of silver bullion. Like the Sprott ETF, it invests directly in physical silver. CIBC Mellon Trust acts as the custodian for the bullion holdings for this fund. The MER is only slightly higher than PSLV (0.66% vs. 0.60%), but it’s a much smaller ETF, with just over $72 million in AUM. If you’re a fan of IShares ETFs in general, SVR is worth consideration.
Inception Date: July 5, 2009
AUM: $72 Million
What We Like: Canadian dollar hedged
3. Purpose Silver Bullion Fund
The Purpose Silver Bullion Fund sits behind SVR on our list for the sole reason that it’s a smaller fund (less than $50 million AUM) and has a much shorter history (the fund was launched in 2016). In future years, it might move up the list due to its much lower MER of 0.40%. Like SVR, it’s backed by physical silver held by a Canadian chartered bank.
Inception Date: May 10, 2016
AUM: $46.8 Million
What We Like: Low MER
4. Horizons Silver ETF
Unlike the preceding funds on our list, the Horizons Silver ETF invests in silver futures contracts. Specifically, it seeks to replicate the performance of the Solactive Silver Front Month MD Rolling Futures Index ER. The fund is hedged to the Canadian dollar. The AUM is low, at only $23 Million, and the MER is on the high side, at 0.78%. But if you’re looking to own silver futures, HUZ is a solid choice.
Date of Inception: June 24, 2009
AUM: $23 Million
What We Like: Lets you invest in silver futures
5. ETFMG Prime Junior Silver Miners ETF
The ETFMG Prime Junior Silver Miners ETF invests in small-cap companies involved in the exploration and production of silver. It does so by tracking the Prime Junior Silver Miners & Explorers Index. The fund has 56 holdings and a decently-sized AUM of $650 million. The MER is a respectable 0.69%.
This is a very high-risk fund that isn’t invested directly in silver bullion, so I don’t recommend it as a primary silver holding in your portfolio. However, if you’re looking to add some volatility in the precious metals sector, SILJ is an option.
Date of Inception: November 28, 2012
AUM: $650 Million
What We Like: Invests in small-cap equities
Silver ETF Pros and Cons
Regardless of how easy it may be to purchase silver ETFs, some will always prefer owning physical silver. To help you decide, here’s a list of silver ETF pros and cons:
- More liquid than physical silver
- You can hold silver ETFs in a tax-deferred account (RRSP, TFSA)
- No shipping costs
- Trading fees may apply
- Not all silver ETFs are backed by physical silver
- Some ETFs are less liquid
How Risky Are Silver ETFs?
No matter what silver ETF you buy, it’s critical to understand that any investment in silver is high-risk. The price of silver is highly volatile – while it rose sharply at the outset of the COVID-19 pandemic, it’s been hammered so far in 2022.
If you want to get as close as possible to the real thing, your best bet is to choose a physical silver ETF backed by silver bullion. But it should never comprise a significant portion of your overall portfolio. Precious metals should be considered a complementary holding, at best.
How Can I Buy a Silver ETF?
The best way to purchase silver ETFs is through an online broker. Our top choices here at MapleMoney are Questrade and Wealthsimple Trade because offer no-commission ETF purchases. This lets you save as much as $9.95 per trade, the going rate for most Big Bank brokers.
Keep in mind – like other precious metals, the price of silver fluctuates up and down, making it a risky investment. It’s more thinly traded than gold, which adds to the volatility. Even when you purchase it as an ETF, your investment could lose value. For these reasons, it’s important to purchase silver as a long-term holding and don’t overweight it in your portfolio. Of course, always consult with a professional before you invest.