Hyderabad: Gold and silver are the precious metals that are inextricably linked with Indians. From an investment point of view, these are the ones that attract the most people. Hence, Gold ETFs have been gaining popularity since their launch. They allow you to invest in ETFs without having to buy gold directly. Now, the market is abuzz with Silver ETFs (Silver Exchange Traded Funds).
Silver ETF Fund: New technologies are increasing the use of silver in 5G, electric vehicles and green energy. This is because metal is a good conductor of electricity. In this backdrop, demand for silver is likely to increase in the future. SEBI, the market regulator, has decided to provide opportunities for small investors with an aim of providing rewards to investors.
To this end, it gave a nod for silver approved ETFs in September 2021. It then announced the modalities in November. In line with this, many fund companies are all set to launch Silver ETFs in the new year. The first fund was made available from ICICI Prudential Mutual Fund under the name ICICI Silver ETF. You can invest at least Rs 100 in it and a new fund offer (NFOs) will be available till January 19.
Furthermore, Silver ETFs will invest up to 95% in silver and silver related schemes. You can buy 30 kg silver bars with 99.9% quality and this silver must meet the London Bullion Market Association quality standards. SEBI has made it mandatory for transparency. Similarly, fund companies should regularly check these silver reserves held by the custodians for the value of the Silver ETFs. While the auditor of the mutual fund is required to submit his report to the fund trustees every six months.
Investing in silver has so far only been possible through the Multi Commodity Exchange (MCX). However, this Futures investment approach is not feasible for everyone. Must be very skilled. But, you can also invest up to Rs 100 with Silver ETFs. These avoid the need to buy silver directly. Silver can be purchased and stored electronically. These units can be operated at a low cost. Notably, you will be able to sell them when needed (during market hours). Usually, the price of silver varies depending on the region, but there is complete transparency in ETFs.
A Demat account is not required to invest in regular mutual funds. However, transactions in ETFs require Demat and trading accounts. But, soon the fund companies will also be releasing the Silver Fund of Funds so that we can invest in Silver ETFs without having a Demat account.
Rs 79,816 crore worth of silver was used for industrial purposes in 2020. Similarly, Rs 34,985 crore worth of silver was purchased for jewellery and Rs 38,711 crore for investments. However, fluctuations in silver are likely to be high. Proper analysis is not available on what would be the returns in the long run. If you want to invest, experts advise you to follow the strategy of buying at the right price and selling at the right time. At the same time, it is advised not to allocate more than five per cent of the total investment.
Also read: Gold ETFs: Why you should look beyond physical gold for investments
