ICICI Prudential Mutual Fund Silver ETF NFO: The Silver Exchange Traded Fund (ETF) of ICICI Prudential opened for subscription on Wednesday i.e. January 5, 2022. Also, a number of mutual funds are ready to introduce their silver ETFs subject to certain regulations by the market regulator Securities and Exchange Board of India (SEBI).
Know what is the scheme?
The Silver ETF will track the investment returns of its silver holdings. As per SEBI norms, silver ETFs are required to hold silver of 99.9 per cent purity. Mutual funds are required to value silver under London Bullion Market Association (LBMA) standards.
The expense ratio of the ETF will be 50-60 basis points. Since it is an ETF, only investors having demat account will invest in it. Investors will have to pay brokerage fees or other costs of transacting on the exchange. ICICI MF will launch the Silver ETF Fund of Funds on January 13, 2022, which will allow even those who do not have a demat account to invest in it.
Mutual Funds have an eye on these 10 sectors in 2021, have you also invested in them?
how does it work
In addition to being a precious metal, silver is widely used in the industry. Hence, given the economic recovery and growth, it could be a good bet.
Silver is used in many electronic components – electrical circuits, batteries, LED chips and RFID chips. It is also used in photovoltaic cells (for solar energy), medicine, nuclear reactors, gadgets, electric vehicles, etc.
Chintan Hariya, Head – Product Development & Strategy, ICICI Mutual Fund said, “The use of silver in the industry has grown exponentially. Due to this trend, silver is consumed and it is not recycled. So, if the demand picks up, silver prices may go up.”
Silver has outperformed gold since 2020, but over a period of 10 years, gold has given good returns.
Rahul Kalantri, Vice President (Commodities), Mehta Group said, “When gold prices go up, demand for silver also increases and then silver starts strengthening. Similarly, when gold breaks down, demand shifts from silver to gold, and then silver prices start depreciating.
These are the top 10 stocks in the financial services sector, in which MF schemes have invested thousands of crores, did you buy?
what doesn’t happen
Even though there is some link between gold and silver prices, this is not always the case. For example, safe haven demand for gold may increase due to a slowdown during the pandemic, but silver may decline due to a slowdown in the industry.
Rupesh Nagda, Founder and MD, Family First Capital, says that due to volatility in silver prices, investors may avoid holding it for a long period. “Silver prices fluctuate more than gold,” Haria said.
Moneycontrol’s stance
Considering diversification and hedging against inflation, gold linked investment products should be adequate for investors. It will also work well against volatility related to equity. Investors looking for more diversification can consider silver ETFs for lower allocation from their portfolio. The NFO will be open till January 19, 2022.
.