Funds Taking a Shine to Silver
Gold gets the headlines, but these funds like the other precious metal.
With gold prices hovering near all-time highs, it's been easy to overlook the performance of the other precious metal--silver. Like gold, silver is seen as a hedge against inflation, and more broadly against a decline in the value of the U.S. dollar and other paper currencies. High gold and silver prices reflect the market's fears that the Federal Reserve's expansive monetary policy, taken in response to the continuing sluggishness of the U.S. economy, will weaken the dollar and eventually lead to high inflation. Silver prices have spiked more than 20% since mid-August, outpacing gold, and recently hit their highest level since 1980.
It's possible to get direct silver exposure through exchange-traded funds such as iShares Silver Trust (SLV), which invests directly in silver bullion. Silver-mining stocks provide less-direct exposure to silver, with an overlay of business and macroeconomic risk. (Unlike gold, silver is used in a variety of industrial applications, including electronics and solar reflector panels.) The wobbly economic environment hasn't held back silver stocks lately; they've gained an average of 20% over the past month, in line with silver prices.
Quite a few mutual funds have some silver exposure, mainly through silver-mining stocks. (Only a handful of mutual funds, none of them very big, hold significant amounts of the iShares Silver Trust ETF.) If we limit ourselves to funds with at least $100 million in assets, the following table shows the 10 with the highest percentage of their portfolio in silver stocks. The table also shows the size of each fund's asset base and its percentile ranking in its category over the past month and the past year (as of September 23).
David Kathman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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