Bank of America Names 4 “Attractive” ETFs

As the price of gold hits new all-time highs and silver hits a multi-year high, Bank of America has identified four exchange-traded funds (ETFs) that offer attractive exposure to precious metals. Top-rated ETFs include the abrdn Physical Silver Shares ETF (ticker SIVR), iShares Silver Trust (SLV), Invesco DB Precious Metals Fund (DBP), and the ABrdn Physical Precious Metals Basket Shares ETF (GLTR). Bank of America rated the four ETFs as “more attractive” compared to other ETFs with similar assets. The Wall Street bank also has a “favorable opinion” rating on the sectors represented by the ETFs. These funds reflect baskets of physical precious metals, with varying allocations to silver, gold, palladium and platinum. Bank of America research also suggests that a portfolio with 40% exposure to broad commodities would have outperformed a portfolio with 40% U.S. Treasury bonds by 0.8% per year since 1945. Despite strong performance Since the Covid-19 pandemic, long-term commodity yields are still near historic lows, according to BofA. Broad commodity indexes returned 20% annually in the 1970s and averaged returns of 5 to 10% during the 1990s and 2000s, but post-global financial crisis returns were the lowest on record since the Great Depression. Bank of America believes that commodities are on the verge of a mean reversion, and its ETF strategist, Jared Woodard, adds: “Commodities are still at historic lows relative to financial assets, and this ratio would probably increase as part of a sustainable evolution towards a lower level. 5% world.” abrdn Physical Silver Shares ETF SIVR is the lowest-cost silver fund in Bank of America’s coverage, with a total expense ratio of 0.50%. The Bank of America Commodities Team is also bullish on silver and expects spot prices to end 2024 at $26.46 per ounce and $32.50 per ounce by the end of next year. at $30.50 an ounce late last week “The silver market has rebalanced based on production discipline and demand for new applications, including solar panels,” they said. BofA strategists @SI.1 Line 1 year iShares Silver Trust SLV, while larger than SIVR in terms of assets under management, could offer higher liquidity and a lower bid-ask spread for investors giving liquidity priority, according to Bank of America SLV SIVR 1Y line Invesco DB Precious Metals Fund DBP, with an 80% allocation to gold and 20% to silver, is also favored by the materials team. bank premieres. However, it’s also the most expensive ETF among BofA’s picks, with a total expense ratio of 0.77%. “DBP’s heavy gold weighting contributed to its outperformance versus GLTR,” the BofA strategist said. The abrdn Physical Precious Metals Basket Shares GLTR ETF offers more diversified exposure, with over 60% in gold, over 20% in silver, and the remaining 10% in platinum and palladium. “The fund is [more than] 60% gold and [more than] 20% silver, and our commodities team is bullish on both,” BofA said. “In our view, the palladium and platinum weightings are not large enough to have a material impact.” — Michael Bloom of CNBC contributed to the report.

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