By John Schloegel
ETF Securities Ltd. (ETFS), one of the world’s largest commodity-based ETF providers, launched its first US-listed product (press release) last Friday (7/24/2009) with the introduction of ETFS Silver Trust (NYSEARCA:SIVR). Realizing that they do not enjoy first mover status here in the US, the London-based firm is coming in aggressively against iShares Silver Trust (NYSEARCA:SLV) by capping the expense ratio at .30% during the first year. This compares favorably to the .50% expense ratio on SLV. The ETF Securities website states that the expense ratio will be capped at .45% after the first year.
The objective of SIVR is to track the performance of silver bullion. The shares are backed by physically allocated bullion held by the custodian, HSBC Bank (HBC). Each share will represent one ounce of silver. Additional information can be found in the fact sheet (pdf) and prospectus (pdf).
ETF Securities has filed for a host of new ETFs in the US as they seek to capitalize on the demand for commodity-based exchange-traded products. On the surface, SIVR is a me too product, with the most noticeable difference being its one ounce per share structure versus the ten ounces of silver represented by each share of SLV. Perhaps there are differences in terms of auditing, as the ETF Securities literature seems to play up the independent vault inspection report, and how one of the twice-a-year audits will be a “surprise audit” conducted by world renowned bullion assayers Inspectorate International.
No matter what the material differences (if any) between SIVR and SLV turn out to be, we’ll watch from the sidelines for now to see if trading activity turns into something substantial or not. We will be looking at average daily value traded (ADVT) since volume comparisons will be skewed by the 10:1 ratio of silver bullion in each share of SLV versus SIVR.
Disclosure: No positions