ETFMG Prime Junior Silver ETF (SILJ - Free Report) topped the list of best-performing ETFs in the third quarter, gaining nearly 28%. Being a leveraged play, metal miners tend to experience more gains than their bullion cousins in a rising metal market.
The risk-off trade environment has driven silver prices higher as the white metal is regarded as a store of wealth and an alternative investment to risky assets during economic and political uncertainty (read: Why Silver ETFs are Outshining Gold).
Though demand for silver has weakened due to slowdown in industrial activity in major economies, ongoing growth in the global solar PV industry, rebound in global computer shipments as well as new sources of demand for sensors used in IoT and OLED lighting are providing boost to the requirement for silver. Notably, silver is used in a wide range of industrial applications. About 50% of the metal’s total demand comes from industrial operations while 30% emerges from jewelry/silverware/coins and medal manufacturers. Further, the latest rounds of upbeat data across the globe have eased recession fears that will perk up industrial demand for silver.
Further, the Fed easing policy has pushed the dollar down against a basket of currencies and makes dollar-denominated assets attractive to foreign investors, thereby raising the appeal for the white metal.
Let’s take a closer look at the fundamentals of SILJ.
SILJ in Focus
This product provides direct exposure to the silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index. It holds 32 stocks in its basket with higher concentration on the top four firms. Canadian firms take the lion’s share at 67.9% while the United States and Peru take the remainder. The fund has managed assets worth $115.2 million and trades in a good volume of about 266,000 shares a day. It charges 69 bps in annual fees (read: 5 Excellent ETFs Under $20).
Though most stocks in the fund’s portfolio delivered strong returns, a few were up in double digits in the third quarter. Below we have highlighted the five high-flying stocks in the ETF with respective positions in the fund’s basket:
Best-Performing Stocks of SILJ
Silvercorp Metals (SVM - Free Report) : This company is engaged in the acquisition, exploration, development, and mining of silver and related mineral properties in China. The stock occupies the seventh position in the basket with 4.5% share in the SILJ portfolio and surged 77.2% in the third quarter. Silvercorp Metals carries a Zacks Rank #2 (Buy) and a favorable VGM Score of B. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alexco Resource Corp (AXU - Free Report) : This company is engaged in mineral exploration plus mine development and operational activities, primarily in Yukon Territory, Canada. It jumped about 75.5% in the third quarter. Alexco Resource currently has a Zacks Rank 2 and an unimpressive VGM Score of F. The stock occupies the 13th position in the fund’s portfolio, making up for 2.1% share.
SilverCrest Metals (SILV - Free Report) : This company acquires, explores and develops precious metal properties in Mexico. It primarily explores silver and gold properties. The stock rose about 46.3% this quarter. It currently has a Zacks Rank #3 (Hold) and an unattractive VGM Score of F. SilverCrest Metals takes the 10th spot with 4.1% allocation.
Pan American Silver Corp. (PAAS - Free Report) : This company is engaged in the exploration, development, extraction, processing, refining, and reclamation of silver mines. The stock rallied 31.5% in the third quarter and occupies the second spot in SILJ portfolio with 11.7% allocation. It is Zacks #2 Ranked and has a VGM Score of D (see: all the Materials ETFs here).
Endeavour Silver Corp. (EXK - Free Report) : This company is engaged in the acquisition, exploration, development, extraction, processing, refining and reclamation of mining properties in Mexico and Chile. It also delivered incredible returns of 28.3% in the third quarter. The stock has a Zacks Rank 3 and a VGM Score of C. Endeavour Silver captures the eleventh position and makes up 3% of SILJ.
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