One of the newest entrants to the space, the RBS Rogers Enhanced Precious Metals ETN (NYSEArca: RGRP), holds a broad basket of the four metals, but uses futures contracts for its exposure. RGRP has done very well in its short life, though it’s too early to know whether its ability to outperform will continue.
The differences between the strategies can be severe. Over the past six months, WITE has returned 8 percent, compared with GLTR’s 2 percent and DBP’s -1 percent.
If you’re thinking about expanding your precious metals allocation from gold into a broader basket, the choices before you are simple. The first question is, quite simply, how much gold you want in your basket. DBP, JJP and BLNG make much larger allocations to gold than their more diverse peers: 70-80 percent vs. 50 percent for GLTR and RGRP and 0 percent for WITE.
The second question is whether you want exposure to futures contracts or the physical metals themselves. The physical metals ETFs are cheaper than their futures-based counterparts and better indicators of spot prices, so are really the win-win situation here since they also provide the broadest coverage.
If you want a broad, diverse basket of precious metals, GLTR is the way to go (or WITE if you already own gold).
At the time this article was written, the author held no positions in the securities mentioned. Contact Carolyn Hill at [email protected].