Not All Platinum ETFs Are Created Equal

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Includes: PGM, PPLT, PTM, SPPP, WITE
by: FX Metrix, LLC

Summary

Platinum ETFs all seek to track the exact same metal, yet they are not all the same!

We do a side by side comparison of the numbers, as well as analyze the data to help determine which platinum ETF is right for you.

Each platinum ETF has its own pros and cons ranging from expense ratios, to average bid-ask spread.

Background
For investors who want to get involved with platinum action without starting a futures account, they can turn to ETFs. When it comes to platinum ETFs, not all are created equal. This is what tempted us to do a side-by-side comparison to help investors and traders alike determine whether or not they are using the proper platinum ETF for their needs.

While there is one significant thing in common with these five funds, the differences are all too often overlooked. Assuming one platinum ETF is the same as another is a foolish mistake that could be costly over time. Two of the funds we have included are not 100% platinum funds, yet have significant exposure to platinum. The five ETFs in order of AUM are as follows:

  1. ETFS Physical Platinum Shares ETFs (NYSEARCA:PPLT)
  2. Sprott Physical Platinum and Palladium Trust (NYSEARCA:SPPP)
  3. UBS ETRACS CMCI Long Platinum Total Return ETN (NYSEARCA:PTM)
  4. ETFS Physical White Metals Basket Shares ETFs (NYSEARCA:WITE)
  5. iPath Bloomberg Platinum Sub-Index Total Return ETN (NYSEARCA:PGM)

PPLT Chart

PPLT, PTM, and PGM all seek to give investors exposure to platinum and only platinum yet the devil is in the details. SPPP and WITE are more diversified as SPPP holds palladium in addition to platinum, and WITE holds silver and palladium in addition to platinum. As shown above, all five funds have had fairly similar performance over the last one year period.

As we dig through the details of these five funds, we hope to help investors better determine which is the best method for them to get platinum exposure.

Side-By-Side Comparison

Ticker

PPLT

PTM

PGM

SPPP

WITE

Name

ETFS Physical Platinum

UBS ETRACS CMCI Long Platinum Total Return

iPath Bloomberg Platinum Sub-Index Total Return

Sprott Physical Platinum and Palladium Trust

ETFS Physical White Metal Basket

Price
(Open 2/5/16)

$86.74

$9.69

$18.58

$6.04

$26.93

AUM
(millions)

$399.22

$18.66

$7.63

$91.31

$16.00

Expense
Ratio

0.60%

0.65%

0.75%

0.50%

0.60%

Structure

Grantor Trust

ETN

ETN

Closed End Trust

Grantor Trust

Average Daily Volume ($)

$2.88 M

$26.26 K

$33.37 K

$489.56 K

$79.81 K

Average
Bid-Ask Spread (%)

0.16%

0.93%

1.54%

0.33%

0.28%

% Platinum

100%

100%

100%

30.4647%

0.9823%

% Palladium

0%

0%

0%

69.5353%

0.7859%

%
Silver

0%

0%

0%

0%

98.2318%

Click to enlarge

Lowest Expense Ratio
For the platinum investors with a longer-term investment outlook, the high expense ratios of PTM and PGM at 0.65% and 0.75% of AUM annually can really take away from potential gains. Those investors should be considering PPLT as a means of gaining physical exposure to platinum with a lower expense ratio of only 0.60%. While SPPP has the lowest expense ratio out of the five with 0.50%, it should be noted that this each unit is a basket of approximately 70% palladium and 30% platinum in terms of ounce for ounce holdings.

Lowest Bid-Ask Spread
For the platinum ETF investors who tend to change their mind on trades often, or for those who just happen to be active traders in general, look to the ETF with the lowest bid-ask spread. In this measure, we believe that the choice is clear for active traders: PPLT. With the lowest average bid-ask spread of 0.16%, PPLT is by far the lowest ETF in terms of transaction costs (commissions held constant). With that being said, for those traders really cutting transaction costs on their platinum ETF trades, PPLT and WITE are both available for commission free trading through Charles Schwab accounts (NYSE:SCHW).

Highest Volume
PPLT is by far the fund with the most liquidity in terms of volume, which is believable as it is the largest of the five funds by AUM. PPLT is therefore the fund of choice for traders looking to move in and out of the platinum ETF market with measurable size. Trading big in any of the other funds (most especially SPPP due to its closed end nature) could make waves and chase the price up quickly.

PPLT Volume Chart

Physically Backed vs. Derivative Backed
Another major difference between these funds is the method by which the fund exposes investors to platinum. PPLT, SPPP and WITE use physical bullion to back their funds, allowing their funds to better track spot prices. On the other hand, PGM and PTM both use platinum futures strategies to give holders of these ETNs exposure to platinum. We tend to prefer those which hold physical bullion, as they can more accurately track movements in the underlying assets.

Metals Mix
One final decision to make when determining which fund is best for you, is whether or not you are looking for a diversified metals basket, or just a pure-play platinum fund. If you are looking for a pure-play exposure to platinum and nothing else, PPLT, PTM and PGM are the way to go. However, if you are willing to look towards a diversified basket by adding exposure to similar metals like palladium, then SPPP and WITE may be the way to go. As shown in the introduction, the five funds have extremely similar price performance anyways.

Share Price
Last but not least, we wanted to mention share price because this comes into consideration for smaller traders/investors with limited capital trying to trade in round lots. When it comes to share price, smaller traders can look towards PTM and SPPP which both currently trade below $10 per share. Just be sure to check the premium/discount to NAV that the funds are trading at before timing an investment.

Conclusion
We hope this was a useful and comprehensive guide to investing in platinum ETFs. We look forward to keeping investors informed on any new developments as we see them. Be sure to check out our similar article on physically backed gold ETFs as well as our similar article on physically backed silver ETFs.

References

PPLT Profile

PTM Profile

PGM Profile

SPPP Fact Sheet

WITE Profile

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.