Silver ETF

• Silver is considered to be a very important and auspicious metal in India. Many Indian households traditionally like to buy silver on important auspicious occasions like Deepawali, Dhanteras, Ugadi and Akshay Tritiya, etc. Following Indian social and cultural traditions, silver utensils and jewelleries are often gifted to newlywed couples or new born babies on occasions like Annaprashana, birthdays, etc. With economic growth and rising per capita income in India, demand for silver is likely to increase in the future.
• Silver is also an important metal for use in industries like solar panels, electric vehicles, smartphones and advanced electronics, etc. As these new age industries are growing very fast, the demand of silver for industrial use is expected to rise significantly in the future.
• Though industrial demand is rising, the supply of silver is relatively constrained. Therefore, there is considerable scope of higher returns on investment from silver.
• Like Gold, Silver is also seen as a store of economic value over the long term period. Over a long drawn out time period silver can retain its purchasing power, and is therefore, has traditionally seen as one of the safest assets in India.
• Silver, as an asset class, can be useful for your portfolio asset allocation purposes as you can diversify the portfolio risks because silver has low correlation with equities.
• It has been seen that often Silver has outperformed gold returns in bull-markets. Hence it can add into further portfolio diversification or asset allocation in your investments.

Since Silver ETFs are relatively new, most Indian households still buy silver in physical form e.g. silver jewellery, silver coins, bars and biscuits. The main problem with physical silver as an investment is impurity. Most silver jewelleries will have impurities. The impurities will be deducted from the price of silver when you are selling. The other problem with silver jewellery is maintenance as it requires regular cleaning / polishing to remove the tarnishes and maintain glaze. Finally, you need to incur storage costs (example – bank locker rent) for silver jewellery, bars and coins. Silver ETF Fund is a cost efficient way of investing in silver as there is no risk of impurities, no maintenance and no storage costs are involved. They can be much more convenient, cost efficient and liquid investments compared to physical silver.

Silver ETFs are financial instruments which track the price of pure silver. These instruments invest in physical silver or silver related instruments. Physical Silver of 30 kg bars with fineness of 999 parts per thousand (or 99.9% purity) conforming to London Bullion Market Association (LBMA) Good Delivery Standards are only permitted by SEBI for Silver ETF India funds.

• Purity is a very important consideration in purchasing physical silver. Silver ETF would invest in physical silver of high purity (999 parts per thousand purity) conforming to the standards of London Bullion Market Association (LBMA).
• Physical silver requires much more storage space and costs. As Silver ETF is a financial asset, there are no storage costs and is a much more cost efficient investment option.
• Liquidity is the most important consideration in any physical asset you invest, especially silver. ETFs are highly liquid investments. You can sell units of Silver ETFs on any trading day in the stock market. Silver ETF India fund NAVs are available on AMC websites who have Silver ETF funds or on the website www.amfindia.com

Investors should consult with their mutual fund distributors/ financial advisors to know what is flexi cap mutual funds and if it is suitable for their investment needs basis their risk profile.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.