Silver ETFs in India
By the end of last month, SEBI has welcomed the move of launching Silver ETFs in India. At present in India, only commodity traded funds were Gold ETFs. Moreover, as per recent data by AMFI, Gold ETFs together manage assets worth Rs.16349 crore. Especially in India, gold and silver are important asset classes. Globally for the commodity market, silver has always been an integral part of an investor’s portfolio. With the news of Silver ETFs, investors will have one more avenue to diversify their financial portfolios.
Silver ETFs Price
As called out, Silver is already a traded commodity in developed markets. In those markets, the asset management companies launch mutual funds schemes and refer to them as exchange-traded funds which keep a tab on silver prices.
While some funds replicate the returns by investing in futures and others would prefer to buy physical bars for the same. Some also offer leveraged exposure to the underlying metals by investing in companies that deal in such metals. But such ETFs charge more expense ratio.
But in line with gold currently, few AMC as per the SEBI guidelines buy physical gold for the gold ETFs they manage.
However, this will be a costly affair on AMCs as they have to invest in the storage facility as it’s quite cheaper as compared to gold. In return, these charges pass to investors in the form of expense or some hidden charges.
Soon you will receive news from major AMC for the launch of Silver ETFs which will be in line with silver prices.
Will definitely solve a major issue for the investors going through the complexities of the futures contract
and the dangers associated with the same. Silver ETFs will pass the benefits of price efficiency, liquidity, and convenience to retail investors in the long run.
Silver ETFs vs Gold ETFs
Please find the list of differences you may notice in silver ETFs with respect to Gold ETFs:
|Silver ETFs||Gold ETFs|
|Silver ETFs will be considered more volatile in nature and can be used by traders for earning quick profits due to the high swings in prices.||It also has a volatile market but would be less as compared to the silver market. As the size of the silver market is more than gold due to its affordability.|
|As it’s more volatile in nature so gives more chances to its investors to book huge profits. This move will be appreciated by the trader’s group.||As per CPM group data, silver has rallied for 904% more than gold against 636%.|
|Whereas silver is linked to the business cycle so when the economy will perform well, then the demand for silver will rise due to industrial demands & vice versa for gold.||But in terms of diversification, gold ETFs will always have an edge as it’s not related to anything due to disconnecting nature.|
|Storage cost will be high especially for AMC as funds will be backed by physical silver bars which will ultimately become a cost for investors.||As it’s expensive metal as compared to silver so storage cost is far less for AMC so does the expense ratio for these ETFs.|
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Also Read State Bank of India – Gold Coins Scheme
Any Silver ETFs recommendation for purchase?
As of now, there are no silver ETFs launched by AMC.
Are silver ETFs going to be backed by physical silver?
Yes, as per guidelines outlined by SEBI. Physically Backed Silver ETFs seek to track the spot price of silver.
AMC will do this by physically holding silver bullion and coins in a vault on investors’ behalf.