Monday, June 27, 2022
Home Business Finance Kotak Mahindra Mutual Fund files for silver ETF and FoF with Sebi

Kotak Mahindra Mutual Fund files for silver ETF and FoF with Sebi


Asset management company, Kotak Mahindra Mutual Fund, has filed for two new schemes with the Securities and Exchange Board of India (Sebi) — Silver Exchange-Traded Fund (ETF) and Silver ETF Fund of Fund (FoF).

The objective of the schemes would be to generate returns that are in line with the performance of physical silver in domestic prices, subject to tracking error.

Kotak Silver ETF Fund of Fund would generate returns by investing in units of Kotak Silver ETF.

The minimum amount for application in the new fund offer (NFO) of the scheme would be 5,000, and in the multiples of Re. 1 thereafter.

The benchmarks of the schemes would be price of silver based on the London Bullion Market Association (now known as LBMA) daily spot-fixing price.

According to experts, silver is more a tactical allocation as opposed to gold, which is more a strategic allocation for portfolio diversification. Further, 65-70% of the usage of silver is in industrial applications

Silver ETFs are one of the latest investment asset classes to be introduced by the market regulator.

Sebi in September 2021 had approved an amendment to mutual fund rules to enable the introduction of silver ETFs in the Indian financial markets with certain safeguards in line with the existing regulatory mechanism for gold ETFs.

The first funds on the commodity were introduced in the domestic markets in January 2022.

So far, Aditya Birla Sun Life Mutual Fund, ICICI Prudential Mutual Fund and Nippon India Mutual Fund have launched silver ETFs. Further, each of these fund houses has a silver fund of fund (FoF), which in turn invests in their respective ETFs.

ICICI Prudential Silver ETF is the biggest scheme in the category with assets of around 472 crore, as of 31 May 2022.

The silver fund as a category has delivered an average return of -11.52% on a three-month period.

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