The Securities and Exchange Board of India (Sebi) has issued guidelines on how silver exchange-traded funds (ETFs) would be evaluated, paving the way for silver or silver-related instruments to be included in asset management companies’ investment schemes (AMCs).
Silver exchange-traded funds (ETFs) closely monitor the price of the precious metal and are mostly more liquid than holding the metal itself.
- According to SEBI, mutual funds must appoint a custodian to preserve custody of silver or silver-related instrument securities and offer such custodial services as may be authorized by the trustees.
- The money raised through the silver ETF will be invested solely in silver or silver-related securities in accordance with the fund’s investment objective, save to the amount necessary to meet liquidity requirements for repurchases and redemptions, according to the statement.
- SEBI stated that while funds are being deployed, the mutual fund may invest them in scheduled commercial banks’ short-term deposits.
- According to SEBI, silver owned by a silver ETF scheme will be valued at the London Bullion Market Association’s AM fixing price in US dollars per troy ounce for silver with a purity of 999.0 parts per thousand. It stated that mutual funds are permitted to pay transportation charges for silver from the LBMA to the custodian vault, as well as other hypothetical levies.
There are currently no silver ETFs in India, unlike gold ETFs that are backed by genuine gold. The industry in India has been clamouring for the launch of gold and crude oil ETFs for a long time.
People in India currently invest in silver through traditional ways such as silver bars, coins, and jewellery, as well as through paper forms of silver such as futures.
For a long time, investors have been clamouring for crude oil and silver ETFs. Silver is used in industry as well as as a valuable metal. It’s utilised in the production of electrical goods, semiconductors, and electric vehicles, among other things. New asset classes allow investors to experiment with different combinations and invest in what suits them best. Silver ETFs, like gold ETFs and SGBs, can be a valuable addition to our portfolios.