Edelweiss Asset Management Limited has launched a new scheme – ‘Edelweiss Gold and Silver ETF Fund of Fund’. This is the first of its kind fund in India which will give investors exposure to both gold and silver. The new fund offer (NFO) will be open for subscription between 24th August to 7th September 2022.
Edelweiss Gold and Silver ETF Fund of Fund is an open-ended scheme which will invest in Gold and Silver Exchange Traded Funds (ETFs).
In a statement, Edelweiss MC said the Fund of Funds structure offers more convenience, affordability, and liquidity as compared to physical Gold and Silver. It offers a cost-effective and liquid alternative to physical Gold and Silver.
“Gold and Silver have proven to be popular investment tools in current times as they offer a hedge against inflation. These precious metals also have a low correlation with equities and therefore offer you better diversification. Compared to physical gold and silver, the Mutual Fund structure offers greater convenience, affordability, and liquidity,” the AMC said.
Commenting on the NFO, Radhika Gupta, MD & CEO, Edelweiss Asset Management Limited said, “The investment case for these precious twins is very strong as they provide good diversification benefits. Investors can take advantage of gold’s properties to hedge away inflation and leverage the growing use of Silver in the manufacturing of new-age technology products. The Fund of Fund structure provides ease and tax efficiency while rebalancing.”
Who should invest?
According to Gupta, the Edelweiss Gold and Silver ETF Fund of Fund is suitable for investors seeking to invest in asset classes that can aid portfolios during the downturn. It can help investors offset the volatility in their equity portfolios.
“Both metals have underperformed in recent times and the dollar index, which has an inverse correlation with gold and silver, may weaken in the near term, hence, it could be a good time to invest in gold and silver at this point in time,” she said.
Gold and Silver – Are they worth investing in?
Gold performs well during the recession while Silver outperforms during precious metal bull rallies. Both provide a good hedge against inflation in the long run and have low correlations with equities. Both precious metals have limited supply and their demand is rising very fast.
Demand for Silver can benefit from rising new-age technology demands from Electric vehicles, smartphones, and solar panels. The fund is ideal for those seeking to diversify and mitigate the volatility in their equity portfolio. The scheme is a cost-effective and liquid alternative to physical Gold and Silver.
The fund will be managed by Bhavesh Jain and Bharat Lahoti.
What should investors do?
Investors invested in this ETF should be aware of the fact that the stated fund objectives may not be met with certainty. Mutual funds, including ETFs, are subject to market risks. Therefore, it is always advisable to consult a professional financial advisor before making any investment decision.