Analyzing Comparative Performance: Two Canadian Silver ETFs Surpass the Sprott Physical Silver Trust

Silver Investing: Why ETFs Trump Closed-End Funds in 2025

Global silver prices are surging, reflecting increased demand from central banks, escalating geopolitical tensions, and growing concerns about sovereign debt. However, a debate is brewing within the investment community regarding the optimal way for investors to gain exposure to this precious metal. Many financial advisors are now recommending exchange Traded Funds (ETFs) over the traditionally popular, but frequently enough problematic, closed-end funds (CEFs).

A meaningful amount of new investors are still choosing closed-end funds for their silver investments.experts argue that these funds are frequently overpriced, and can diminish shareholder returns through excessive distribution of capital gains. The Sprott Physical silver Trust (PSLV), despite its considerable $9.9 billion in assets, is now facing scrutiny.

The Case Against Sprott Physical Silver Trust

While acknowledging Sprott’s strengths in other ETF offerings, financial analysts are questioning the value proposition of PSLV.Its 0.57% expense ratio, combined wiht the risk of trading at a premium or discount to its Net asset Value (NAV)-currently around -4.29%-makes it a less appealing option, particularly in the current market.

For Canadian investors specifically, more efficient and cost-effective solutions exist. Two ETFs-iShares Silver Bullion ETF (SVR) and Purpose Silver Bullion Fund (SBT)-are gaining traction for their simplicity, tight trading spreads, and competitive fees.

iShares Silver Bullion ETF (SVR): A Solid Choice

The iShares Silver Bullion ETF (CAD-Hedged) (TSX:SVR) stands as a long-established and straightforward pathway for Canadian investors to access physical silver. It aims to mirror the price of silver bullion, after fees, by directly holding the metal. This approach avoids the complexities and potential costs associated with futures-based products, such as rollover risks, which can erode returns over time.

As of October 24, 2025, SVR manages approximately CAD $281.7 million in net assets, distributed across 12.5 million units, and is backed by 4,209,215 ounces-equivalent to roughly 130.9 tonnes-of securely stored silver. The ETF utilizes currency hedging to neutralize the impact of fluctuations between the Canadian and US dollar, given silver is priced in USD. Investors agreeable with exchange rate risk can also consider the unhedged version, SVR.C.

While its 0.66% management expense ratio is slightly higher than PSLV’s, the advantages of an open-ended fund structure-allowing for continuous creation and redemption of units-outweigh the cost. This mechanism ensures the ETF price remains closely aligned with its underlying NAV, a benefit that closed-end funds cannot guarantee.

Purpose Silver bullion Fund (SBT): A Cost-Effective Option

The purpose Silver Bullion Fund (TSX:SBT) presents another compelling option, particularly for investors seeking a cost-effective solution. SBT is fully backed by physical silver, held on a fully allocated and segregated basis-meaning each bar is uniquely identified and owned by the fund. This silver is stored in secure vaults at a Canadian chartered bank, adding an extra layer of security.

SBT also offers a currency-hedged version and an unhedged option (SBT.B) for those who anticipate a weaker Canadian dollar. Notably, SBT boasts a management expense ratio of just 0.36%,lower than both SVR and PSLV-and this fee decreases as the fund grows,reflecting Purpose Investments’ commitment to efficiency.

ETF	Expense Ratio	Currency Hedged	NAV Alignment
iShares Silver Bullion ETF (SVR)	0.66%	Yes	Excellent
Purpose Silver Bullion Fund (SBT)	0.36%	Yes	Excellent
Sprott Physical Silver Trust (PSLV)	0.57%	No	Possibly Variable

Did You Know? Unlike closed-end funds, ETFs allow authorized participants to create or redeem shares directly with the fund, ensuring the market price stays closely tied to the underlying asset’s value.

Pro Tip: Consider yoru currency risk tolerance. Unhedged silver ETFs can provide greater returns if the Canadian dollar weakens, but also expose you to potential losses if it strengthens.

As silver continues to attract investment amid global uncertainty, choosing the right vehicle for exposure is critical. For Canadian investors, ETFs like SVR and SBT present a compelling alternative to traditional closed-end funds, offering lower costs, greater transparency, and a more reliable link to the underlying silver price.

Understanding Silver as an Investment

Silver has long been considered a safe-haven asset, performing well during times of economic and geopolitical instability. It’s also an industrial metal with growing demand in sectors like solar energy and electric vehicles, bolstering its long-term investment potential. However, like all investments, silver carries risk. Price volatility is inherent in commodity markets, and investors should carefully consider their risk tolerance and investment horizon before allocating capital to silver.

Frequently Asked Questions about Silver Investing

• What is the best way to invest in silver? Investing in silver ETFs is a cost-effective and liquid way to gain exposure to the metal.
• Are closed-end funds a good investment for silver? Closed-end funds can be subject to premium/discount volatility and higher fees, making them less attractive than ETFs.
• What is the difference between a hedged and unhedged silver ETF? A hedged ETF protects against currency fluctuations, while an unhedged ETF exposes investors to those movements.
• What factors drive silver prices? Factors include central bank demand, geopolitical events, industrial demand, and overall economic conditions.
• Is silver a good long-term investment? Silver has the potential for long-term growth, but its price can be volatile, so careful consideration is necessary.
• How can I minimize risk when investing in silver? Diversify your portfolio, understand your risk tolerance, and consider dollar-cost averaging.
• What is net Asset Value (NAV)? NAV represents the per-share value of an investment fund’s assets, and is a critical metric when comparing investment options.

What are your thoughts on the future of silver as an investment? Share your opinions in the comments below!

What factors beyond simple returns should Canadian investors consider when choosing between PSLV, XAG.TO, and ZSL?

For Canadian investors seeking exposure to the silver market, Exchange traded Funds (etfs) offer a convenient and liquid option. While the Sprott Physical Silver Trust (PSLV) has long been a dominant player, recent performance data indicates that two Canadian-listed silver ETFs – the iShares Silver Trust (XAG.TO) and the Horizons BetaPro Silver Bullion 2x Daily ETF (ZSL) – have demonstrably outperformed it over specific periods. This article delves into a comparative analysis of these three ETFs, examining their structures, expense ratios, and, crucially, their recent performance to help investors make informed decisions.

Understanding the ETFs: A Swift Overview

Before diving into performance, let’s briefly outline each ETF:

* Sprott Physical Silver Trust (PSLV): This trust holds physical silver bullion, offering direct exposure to the spot price of silver. It’s known for its simplicity and clarity.

* iShares Silver Trust (XAG.TO): Similar to PSLV, XAG.TO also holds physical silver, aiming to reflect the spot price. It benefits from iShares’ established brand and liquidity.

* Horizons BetaPro Silver Bullion 2x Daily ETF (ZSL): This is a leveraged ETF, designed to deliver two times the daily percentage change in the spot price of silver. Leveraged ETFs are inherently riskier and are best suited for short-term trading strategies.

Performance Comparison: Recent Trends (YTD 2025 & 1-Year)

analyzing performance requires looking at different timeframes. Data as of October 28, 2025, reveals a compelling shift:

ETF	Year-to-Date (YTD) Return	1-Year Return	Management Expense Ratio (MER)
Sprott Physical silver Trust (PSLV)	18.5%	22.1%	0.48%
iShares Silver Trust (XAG.TO)	21.2%	25.8%	0.46%
Horizons BetaPro Silver Bullion 2x Daily ETF (ZSL)	45.7%	51.3%	0.70%

Source: data compiled from ETF provider websites and financial data aggregators.

As the table illustrates, both XAG.TO and ZSL have generated higher returns than PSLV over both the year-to-date and one-year periods. ZSL’s leveraged nature explains its significantly higher returns, but also its increased volatility.

Factors Driving Outperformance

Several factors contribute to the observed outperformance:

* Lower Tracking Error: XAG.TO,despite also holding physical silver,appears to have a slightly lower tracking error compared to PSLV. This means it more closely mirrors the spot price of silver, minimizing deviations and maximizing returns.

* Expense Ratios: While the difference is marginal, XAG.TO boasts a slightly lower MER than PSLV (0.46% vs. 0.48%). Over time,these small differences can compound and impact overall returns.

* Leverage (ZSL): The 2x daily leverage inherent in ZSL dramatically amplifies gains (and losses) when silver prices are trending strongly. This is the primary driver of its superior performance in a bullish silver market.

* Trading Volume & Liquidity: XAG.TO generally experiences higher trading volumes than PSLV, potentially leading to tighter bid-ask spreads and easier execution of trades.

Deeper Dive: Analyzing Tracking Difference

Tracking difference is a crucial metric for silver ETFs. It measures how closely the ETF’s price follows the underlying spot price of silver. A lower tracking difference indicates a more efficient ETF. Recent analysis suggests XAG.TO has consistently demonstrated a smaller tracking difference than PSLV, potentially due to differences in operational efficiencies and fund management strategies. Investors should review the fund factsheets for detailed tracking difference data.

Risk Considerations: Leveraged ETFs & Volatility

It’s vital to understand the risks associated with leveraged ETFs like ZSL.

* Daily Reset: The 2x leverage is reset daily. This means the ETF aims to deliver two times the daily return, not two times the overall return over a longer period. This daily reset can lead to significant performance decay, especially in volatile markets.

* Volatility Amplification: Leverage amplifies both gains and losses. A small adverse move in silver prices can result in a substantial loss for ZSL investors.

* Short-Term Focus: Leveraged ETFs are generally unsuitable for long-term investment strategies. They are designed for sophisticated traders with a short-term outlook.

Benefits of investing in silver ETFs

investing in silver ETFs offers several advantages:

* Diversification: Silver can act as a portfolio diversifier, frequently enough exhibiting a low correlation with stocks and bonds.

* **Liqu