Platinum is regarded as an important precious metal by many investors though it's less commonly talked about than gold and silver. Many investors use platinum as a hedge against inflation or as a safe haven in troubling economic times. Platinum is also valuable as an industrial metal, used in the manufacturing of products such as cars, jewelry, and electronics. To gain exposure to the metal, investors may purchase platinum bars or coins, platinum futures contracts, or shares of platinum mining companies. Another option is a platinum exchange-traded fund (ETF). This instrument tends to be more liquid than holding the physical commodity, and does not require paying related storage or insurance costs.

Key Takeaways

  • Platinum prices have dramatically underperformed the broader market over the past year.
  • The ETFs with the best 1-year trailing total return are PLTM, PPLT, and PGM.
  • These ETFs are backed either by physical platinum or platinum futures contracts, rather than stocks of platinum mining companies.

There are two main types of platinum ETFs for investors to choose from. The first is structured as a grantor trust, which means that the fund holds physical bullion in its vaults and then administers the buying, storage, and sale of that bullion on behalf of the trust’s owners. The other common structure is what’s called an exchange-traded note (ETN). These products are unsecured debt securities that track an underlying index and trade on a major exchange in the same manner as a stock. Platinum ETNs invest in futures contracts that track the price of the metal, as opposed to holding it in physical form.

There are 3 distinct platinum ETFs that trade in the U.S. They are aimed at tracking the price of platinum by holding the physical metal or through futures contracts and do not hold shares of platinum mining companies. Platinum futures prices, which generally drive these ETFs, have fallen 2.9% over the past 12 months compared to the S&P 500's total return of 16.9%, as of November 10, 2020. The best-performing platinum ETF, based on performance over the past year, is the GraniteShares Platinum Trust (PLTM). We examine the 3 platinum ETFs that trade in the U.S. below. All numbers below are as of November 10, 2020.

ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs which can negate some of your investment gains or increase your losses.

GraniteShares Platinum Trust (PLTM)

  • Performance over 1-Year: -2.6%
  • Expense Ratio: 0.50%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 39,103
  • Assets Under Management: $15.3 million
  • Inception Date: January 22, 2018
  • Issuer: GraniteShares

PLTM is structured as a grantor trust, which is backed by physical platinum held in a vault. The vault is located in London, and is inspected twice per year. The goal of the fund is to provide a cost-effective way to invest in platinum, by tracking the price of the platinum spot market, less the fund’s expenses. 

Aberdeen Standard Platinum Shares ETF (PPLT)

  • Performance over 1-Year: -3.1%
  • Expense Ratio: 0.60%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 191,177
  • Assets Under Management: $1.1 billion
  • Inception Date: January 6, 2010
  • Issuer: Aberdeen Standard Investments

PPLT is also structured as a grantor trust whose goal is to track the spot price of platinum, after deducting the fund’s expenses. Its benchmark is the PM London Spot Fix for platinum. The fund is backed by physical platinum held in a secure vault located in London. 

iPath Series B Bloomberg Platinum Subindex Total Return ETN (PGM)

  • Performance over 1-Year: -4.8%
  • Expense Ratio: 0.45%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 1,006
  • Assets Under Management: $4.4 million
  • Inception Date: January 17, 2018
  • Issuer: Barclays Capital

PGM is unique on this list in that it is the only fund structured as an ETN. Rather than being backed by physical platinum, the fund invests in futures contracts. Aside from this difference, the core objective of the fund is the same: tracking the spot price of platinum after accounting for the fund’s expenses. Due to PGM's extremely low trading volume, trading costs are likely to be higher as compared to more liquid investments.