Kotak Mahindra Mutual Fund announced the launch of the Kotak Silver ETF Fund of Fund, an open-ended FoF domestic scheme tracking the Price of silver (based on LBMA daily spot fixing price).
The scheme opened for public subscription on March 13, 2023, and will close on March 27, 2023, and will re-open for continuous sale and repurchase on or before April 13, 2023.
Q. What kind of mutual fund scheme is this?
This kind of open-ended FoF domestic scheme aims to generate returns by investing in units of Kotak Silver ETF apart from liquid & overnight Schemes, debt instruments & money market instruments, and debt obligations of domestic government agencies and statutory bodies, which may or may not carry a Central/State Government guarantee, short-term deposits of banks (both public and private sector) and development financial institutions to the extent permissible under SEBI regulations, Certificate of Deposits (CDs), Commercial Paper (CPs), Tri-party repo on Government securities or treasury bills, and reverse repos in such Government Securities as may be permitted by the RBI, subject to applicable regulation.
The product is apt for investors seeking long-term wealth creation solutions.
Q. What is the main objective of investing in this fund?
The scheme’s investment objective is to generate returns by investing in units of Kotak Silver ETF. However, there is no assurance that the scheme’s investment objective will be achieved.
Q. How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1 and of Re 0.01 for switches. Additional purchases of ₹1000 and in multiples of Re 1 for purchases and of Re 0.01 for switches is also available. There is no upper limit for investment.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Investments | Indicative Allocation | Risk Profile |
| Units of Kotak Silver ETF | 95-100% | Very High |
| Debt & Money Market Instruments including units of debt oriented Mutual Funds | 0-5% | Low to Moderate |
Q. Are there similar mutual funds in the market?
To date, many asset management companies have launched ETFs, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
| Name of the fund | YTD (in %) |
| ICICI Prudential Silver ETF Fund of Fund | -8.48% |
| Aditya Birla Sun Life Silver ETF Fund of Fund | -8.54% |
| Axis Silver Fund of Fund | -7.00% |
| HDFC Silver ETF Fund of Fund | -8.62% |
| Motilal Oswal Gold and Silver ETFs Fund of Fund | -2.25% |
| Edelweiss Gold and Silver ETF FOF | -3.87% |
| Source: MoneyControl | |
Q. How will the scheme benchmark its performance?
The Scheme’s performance will be measured against the Price of silver (based on the LBMA daily spot fixing price).
Q. Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” will be applicable as under:
- For redemption/switch-out of units on or before 30 days from the date of allotment: 0.5% of applicable NAV
- For redemption/switch-out of units after 30 days from the date of allotment: NIL.
Q. Who will manage this scheme?
Jeetu Valechha Sonar and Abhishek Bisen will be the fund managers for the scheme.
Q. Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their investment will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
