New York-based Global X has launched the first ETF in Europe to target companies primarily operating within the silver mining industry.
The fund is the first ETF in Europe to provide targeted exposure to the silver mining industry.
The Global X Silver Miners UCITS ETF has been listed on London Stock Exchange in US dollars (SILV LN) and pound sterling (SILG LN) as well as on Deutsche Börse Xetra in euros (SLVR GY).
Silver derives a bit more than half of its demand from industrial applications, while the remainder is attributed to its precious metal qualities including its safe-haven status and its ability to act as an inflation hedge.
Amid a broadly bullish commodities market, silver has notably underperformed this year. The price of silver has fallen 5.1% year-to-date and is currently trading at $23.11/oz – this compares to a 26.3% gain for the broad market Bloomberg Commodity Index over the same period.
Silver has been subject to multiple contrary pressures this year. Tailwinds include rising geopolitical instability brought on by Russia’s invasion of Ukraine and inflation soaring to multi-decade highs. Notable headwinds include a strengthening US dollar, macroeconomic uncertainty, and a shift by central banks towards hawkish monetary policy – higher interest rates reduce the relative value of non-income-earning assets such as precious metals.
While silver’s performance is likely to continue to be influenced by these dynamic factors in the short-term, its long-term outlook is supported by the metal’s importance in key emerging industries including electric vehicles and clean energy technologies.
Morgane Delledonne, Head of Investment Strategy in Europe at Global X, said: “Precious metals such as silver often have a unique appeal for investors in periods of rising geopolitical instability given their potential as defensive assets due to their low correlations to traditional risk assets. In addition, silver has a wide range of applications as well as its precious metal qualities, driving potential adoption.
“With the launch of our silver miners UCITS ETF, we are providing European investors with the opportunity to invest in this key sector at a time of heightened geopolitical risks, historical central bank actions, and side-lined silver output.”
Methodology
The fund is linked to the Solactive Global Silver Miners Total Return v2 Index which selects its constituents from a global universe of companies with market capitalizations above $60 million and average daily trading volumes greater than $250,000.
The methodology screens for firms with “significant business operations” in the exploration, mining, or refining of silver.
From this screened universe, the index selects the 40 companies with the largest average daily trading volumes. Constituents are weighted by float-adjusted market capitalization subject to an individual cap of 15% and an aggregate cap of 55% on the largest five positions. Reconstitution and rebalancing occur semi-annually.
As of 6 May, Canadian stocks accounted for nearly two-thirds (63.4%) of the index weight with the next-largest country exposures being the US (10.5%), South Korea (9.4%), and the UK (6.6%).
Notable positions included Wheaton Precious Metals (16.1%), Pan American Silver (12.7%), SSR Mining (11.3%), Korea Zinc (9.4%), Hecla Mining (6.5%), First Majestic Silver (5.4%), and Compañia de Minas Buenaventura (4.9%).
The ETF comes with an expense ratio of 0.65%.
The fund represents Global X’s third commodities-focused UCITS ETF, following the launches of the Global X Copper Miners UCITS ETF (COPX LN) and the Global X Uranium UCITS ETF (URNU LN) which provide exposure to copper and uranium mining industries, respectively.