SLVP Outperforms SLV Over Five Years With Higher Total Return

The iShares MSCI Global Silver and Metals Miners ETF (SLVP) has delivered a five-year total return of 166%, outpacing the 140% total return of the iShares Silver Trust (SLV). This performance gap corresponds to a compound annual growth rate of 21.6% for SLVP compared to 19.1% for SLV, according to data from The Motley Fool.

The divergence in returns stems from the distinct investment strategies of the two funds. SLV, launched in 2006, is designed to track the spot price of physical silver by holding silver bars in secure vaults. Its portfolio is categorized as 100% Cash & Others, with no individual equities, making it a pure play on the commodity price. In contrast, SLVP, launched in 2012, tracks the equity performance of silver-mining companies. It holds 36 securities concentrated 100% in the Metals & Mining sector.

SLVP's exposure extends beyond the price of silver to the operational performance of mining businesses. As a result, factors such as rising costs, natural disasters, or geopolitical concerns can affect the stock prices of the miners and, by extension, the value of the ETF. The fund holds between 30 and 50 mining companies, with its largest positions including Hecla Mining at 13.74%, Indust Penoles at 11.59%, and First Majestic Silver at 9.98%.

Income potential further differentiates the two options. SLVP pays a dividend with a trailing-12-month distribution yield of 2%, whereas SLV offers no dividend. The Motley Fool notes that SLVP tends to outperform SLV during periods of rising silver prices, driven by both metal value appreciation and equity market dynamics.

Cost is another factor for investors to weigh. SLVP has an expense ratio of 0.39%, while SLV charges 0.50%. The higher fee for SLV reflects the costs associated with storing and securing physical silver bullion. For an investor allocating $10,000 to each fund, the annual cost would be $39 for SLVP shares and $50 for SLV shares.

While both funds provide exposure to silver, a metal often cited as a hedge against inflation and a component in industrial technologies like solar panels and electronics, their risk profiles differ significantly. Beta, which measures price volatility relative to the S&P 500 using monthly returns over up to five years, helps quantify this difference, though specific beta values were not detailed in the comparison. The choice between the two depends on whether an investor prioritizes direct commodity price tracking or is willing to accept operational equity risk for potential higher returns and income.