The fourth-quarter earnings season is expected to be characterized by subdued performances by businesses weighed down by high borrowing costs, deflated asset prices, and softening consumer demand due to decreased discretionary expenditure.
With the Federal Reserve unwilling to risk complacency by taking its foot off the brake with regard to its monetary policy, the pain is expected to continue into the foreseeable future. Federal Reserve Governor Michelle Bowman added, “I expect that once we achieve a sufficiently restrictive federal funds rate, it will need to remain at that level for some time.”
To add to the headwinds closer to home, China, a key source of demand and labor for the modern global economy, revealed a decline in its population for the first time since 1961. Moreover, the Chinese economy expanded at a meager 3% in 2022, the slowest in decades and in stark contrast to the 8.4% growth recorded in 2021.
These headwinds have added credibility to the World Bank’s cut in the global economic growth outlook to 1.7% for 2023 from its earlier projection of 3% and a warning that the global economy is flirting with recession.
Since the economy is not expected to sail in calmer waters anytime soon, precious metals ETFs SPDR Gold Trust ETF (GLD), iShares Silver Trust ETF (SLV), and Aberdeen Standard Physical Platinum Shares ETF (PPLT) could be ideal investments to hedge your portfolio against a choppy market.
SPDR Gold Trust ETF (GLD)
GLD is a world-renowned ETF launched and managed by World Gold Trust Services, LLC. It offers investors exposure to gold, which has of late become an important component of their asset allocation strategy by acting as a hedge against volatility in equity markets, inflation, and dollar depreciation.
With $55.20 billion in AUM, the entirety of GLD’s holdings is in gold bullion stored in secure vaults. The physically-backed nature of this product insulates this product from the uncertainties introduced through futures-based strategies.
GLD has an expense ratio of 0.40%, lower than the category average of 0.49%. The fund’s net inflow came in at $105.96 million over the past month. It has a beta of 0.1.
Due to the increased risk of a global economic slowdown, GLD has gained 5.4% over the past month and 10.6% over the past six months to close the last trading session at $178.76. The fund’s NAV was $177.42 as of January 13, 2023.
GLD has an overall rating of B, which translates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GLD has an A grade for Trade and a B for Buy & Hold and Peer. The fund is ranked #8 of 38 funds in the Precious Metals ETFs category.
iShares Silver Trust ETF (SLV)
SLV is a commodity ETF launched and managed by iShares Delaware Trust Sponsor LLC. With an AUM of $11.04 billion, the fund provides investors exposure to physically backed silver, which forms the entirety of its holdings.
SLV has an expense ratio of 0.50%, comparable to the category average of 0.49%. The fund’s net inflow amounted to $1.96 billion over the past three years. It has a beta of 0.66.
SLV has gained 1% over the past month and 26.2% over the past six months to close the last trading session at $22.33. The fund’s NAV was $21.78 as of January 13, 2023.
SLV has an overall rating of B, which equates to a Buy in our POWR Ratings system. The fund has an A grade for Trade and a B for Buy & Hold.
SLV is ranked #10 of 38 funds in the Precious Metals ETFs category. Click here to see all ratings for SLV.
Aberdeen Standard Physical Platinum Shares ETF (PPLT)
PPLT is a commodity exchange-traded fund launched and managed by Aberdeen Standard Investments ETFs Sponsor LLC. The fund is designed to track the spot price of platinum bullion, thereby providing investors exposure to one of the most expensive metals in the world.
With $1.12 billion in AUM, PPLT’s holdings are solely comprised of bars of platinum in a secure vault, allowing investors to free themselves from finding a place to store the commodity or the uncertainties introduced through futures-based strategies.
PPLT’s expense ratio of 0.60% is comparable to the category average of 0.49%. The fund’s net inflow came in at $273.34 million over the past three years. It has a beta of 0.82.
PPLT has gained 2.6% over the past month and 25% over the past six months to close the last trading session at $99.01 million. The fund’s NAV was $97.74 as of January 13, 2023.
PPLT has an overall rating of B, which translates to a Buy in our POWR Ratings system. It has an A grade for Trade and a B for Buy & Hold and Peer. PPLT is ranked #13 in the same category.
Want More Great Investing Ideas?
GLD shares were trading at $177.25 per share on Tuesday afternoon, down $1.51 (-0.84%). Year-to-date, GLD has gained 4.49%, versus a 4.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|GLD||Get Rating||Get Rating||Get Rating|
|SLV||Get Rating||Get Rating||Get Rating|
|PPLT||Get Rating||Get Rating||Get Rating|