Edelweiss Mutual Fund is set to launch India’s first scheme that offers exposure to gold and silver through a single fund. The scheme will maintain equal allocation between two metals and will rebalance it periodically.
The new fund offer for Edelweiss Gold and Silver ETF Fund of Fund (FoF) will be launched on 24 August and will remain open for investors until 7 September. The fund managers who will manage the scheme will be Bhavesh Jain and Bharat Lahoti.
In November 2021, after the Securities and Exchange Board of India (Sebi) allowed the launch of silver exchange-traded funds (ETFs), five mutual fund houses introduced silver ETFs so far this year - ICICI Prudential AMC, Nippon India AMC, Aditya Birla Sun Life AMC, DSP Mutual Fund and HDFC AMC.
Besides, Nippon India ETF Gold BeES was India’s first gold-based fund introduced in March 2007 while ICICI Prudential Silver ETF was the first silver-based fund launched in January 2022.
Market analysts believe that gold performs well during an economic downturn while silver outperforms during precious metal bull rallies. Both provide a good hedge against inflation in the long run.
The fund house says that both these precious metals have a limited supply and demand is rising very fast. Silver is also set to benefit from rising new-age technology demands from electric vehicles, smartphones, solar panels, etc.
The fund managers at Edelweiss Mutual Fund believe that since both the metals have performed poorly in recent times, it can be a good entry point.
Asset allocation of fund
The investment objective of the scheme is to generate returns by investing in units of Gold ETFs and Silver ETFs. However, the performance of the scheme may differ from that of the underlying gold and silver due to the tracking error of the underlying exchange-traded funds.
There can be no assurance or guarantee that the investment objective of the plan will be achieved, according to the AMC.
The minimum investment amount for the Edelweiss Gold and Silver ETF Fund of Fund is ₹5000 and in multiples of ₹1 thereafter through the lump sum mode. Investors can start a SIP in the fund with as low as ₹500 per month.
Moreover, many other mutual funds houses like Motilal Oswal MF and ICICI Prudential MF have filed drafts for gold and silver funds in February and December, respectively, however, they are yet to launch the schemes.