
Kotak Mahindra Mutual Fund, an Asset management company has filed for two new schemes with the Securities and Exchange Board of India (SEBI) — Silver Exchange-Traded Fund (ETF) and Silver ETF Fund of Fund (FoF).
SEBI in September 2021 had approved an amendment to mutual fund rules. To enable the introduction of silver ETFs in the Indian markets with certain rules in line. Currently, Silver ETFs is one of the most trending investment asset classes to be introduced by the market regulator. The silver fund as a category has delivered an average return of -11.52% on a three-month period.
The primary objective of the schemes would be to generate returns that fall in line. With the performance of physical silver in domestic prices, subject to tracking error. The ETF Fund of Fund would produce returns by investing in units of Kotak Silver ETF. The Benchmark of the scheme would be the price of silver based. On the London Bullion Market Association (LBMA) daily spot-fixing price.
The minimum amount for application in the new fund offer (NFO) of the scheme would be ₹5,000, and in the multiples of Re. 1 from there on after
Up until now, Aditya Birla Sun Life Mutual Fund, ICICI Prudential Mutual Fund and Nippon India Mutual Fund have launched silver ETFs. Further, each of these fund houses has a silver fund of fund as well. Presently, ICICI Prudential Silver ETF is the biggest scheme in the category with assets of around ₹472 crore, as of the information available on 31st May 2022
According to Market experts, silver is more a prudent allocation as opposed to gold. Which is more a strategic allocation for portfolio diversification. Further, 65-70% of the usage of silver is in industrial realm.