just like gold etfInvestors can use these funds to diversify into parallel assets. However, the question of whether silver ETFs are eligible to be included in a retail investor’s portfolio remains in question.
Currently, gold is the only precious metal that is available to investors in the form of an ETF. Gold ETFs collectively manage assets worth Rs 16,350 crore as on August 31, 2021.
“The introduction of Silver ETFs is certainly a good development for retail investors who are looking for Investment Exposure to silver as an asset class. Like Gold ETFs, Silver ETFs will also pass on the benefits of price efficiency, liquidity and convenience to retail investors,” says Chirag Mehta, Senior Fund Manager, Alternative Investments, Quantum Mutual Fund.
However, Mehta cautions investors to keep a check on their expectations. “Investors need to understand that the portfolio diversification benefits of gold are much greater than those of silver and should be evaluated on the basis of its investability. For now, we will have to wait for the operational details of the Silver ETF to come out. ,” says Chirag Mehta.
Gold and silver are often seen as similar in a way, but experts agree that sometimes the demand and supply of silver can be completely unrelated and opposite to gold.
Preeti said, “Silver ETFs solve major problems for investors. Firstly, investing in silver is easily accessible. Investors who are tired of the complexities and risks associated with futures contracts, can opt for this mode more. more comfortable,” Preeti said. Rathi Gupta, Founder, LXME – a financial planning platform for women in India.
“As per SEBI, for introduction of silver exchange-traded funds, certain safeguards should be in line with the existing regulatory mechanism for gold ETFs. This means asking the fund house from the regulator to continue the same practice of making physical silver bars. is expected. for Silver ETFssaid Gupta.
Elaborating further, Gupta said that, “By using this physically backed strategy, this fund can eliminate a lot of the issues and give investors more realistic pricing of the metal. The physical silver market in India is of silver. Deep enough to support, moderate external factors influence price volatility,” says Preeti Rathi Gupta.
However, experts also believe that silver, like gold, can be volatile and hence is a risky bet. Fund managers and financial planners say that there is currently no clarity on the expense ratio and other key dynamics of silver ETFs, so one must wait and watch.