Silver exchange-traded funds (ETFs) have gained modest traction in their first year, with assets under management (AUM) of around ₹1,500 crore at the end of November, a report by Business Standard stated.
Investment advisors told BS that such products have a place in asset allocation and flows will pick up once they register a good showing on the returns chart.
ICICI Prudential, Aditya Birla Sun Life, and Nippon India were among the first fund houses to launch silver ETFs in January-February 2021, informed BS. There are now seven such offerings with Axis MF, HDFC MF, Kotak Mahindra AMC, and DSP Investment Managers also entering the space, it added. The number of folios (investment accounts) stood at 69,000 at the end of November, or 1.5 percent of total folios in gold ETFs, stated the report.
“Silver ETFs are an interesting addition to the list of MF offerings. But I am not recommending them to clients as yet because they’re still new and there are better opportunities elsewhere,” said Tarun Birani, founder of TBNG Capital Advisors.
According to the aforementioned fund houses, the product has received a good response considering that it is a new offering.
As per the report, brokerages have an upside bias for silver in 2023 as they see strong demand for the metal amid the global green energy push and rising industrial demand.
"Silver prices are likely to move higher, outperforming gold as the silver market is likely to remain in deficit for a second consecutive year. Demand in the industrial sector is likely to grow amid electrification of vehicles, 5G technology, and commitment to green infrastructure," ICICI Direct said in a report.