Kotak Mahindra Asset Management Company (AMC) has launched an open-ended Silver Exchange Traded Fund. The AMC said in a statement that Silver ETF will provide investors with an opportunity to hedge against the ongoing economic uncertainties and geopolitical risks prevalent across several major global economies.
The New Fund Offer (NFO) will open for subscription for all investors on 21 November 2022 and close on December 5, 2022.
Scheme Objective
Kotak AMC said that the objective of the scheme is to generate returns in line with the performance of physical silver in domestic prices, subject to tracking error.
The Scheme may also participate in silver-related instruments. Exchange Traded Commodity Derivatives (ETCDs) having silver as the underlying shall be considered as a Silver-related instrument for Silver ETFs. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved, the AMC said.
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The units of the fund will be in the form of creation unit size or in multiples thereof. Each creation unit consists of 30,000 units of Kotak Silver ETF. Each unit is approximately equal to 1 gram of Silver.
Is silver ETF worth investing in?
Kotak AMC said in the statement that investing in Silver ETFs is easier and safer than buying it in its physical form, providing easy liquidity and the flexibility to invest in smaller quantities. Furthermore, it offers lower transaction costs than physical silver while delivering the market equivalent price of the metal.
In the post-pandemic period, demand for silver has outstripped supply due to an uptick in industrial activity and a surge in retail investor appetite for the metal, according to World Silver Survey 2022.
In 2021, there were record inflows into silver exchange-traded products. The silver lining is that the metal has clocked 43% absolute returns in the 5-year period. However, the past performance may or may not be sustained in the future, the AMC said.
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Commenting on the NFO, Nilesh Shah, Group President and Managing Director, Kotak Mahindra AMC said, “Our Silver ETF launch is in line with our continued effort to provide easy and efficient access to various asset classes. It will provide convenient access to Silver as an asset which is not only a precious metal but also has many industrial uses. The consolidation in Silver prices since the start of the year provides a good opportunity for those looking to allocate some money to this asset for diversification.”
(Disclaimer: Views expressed above are those of Kotak AMC and respective commentators. Mutual fund investments are subject to market risks. There is no assurance or guarantee that the scheme’s objectives will be met. Please consult your financial advisor before investing in this fund)
