Axis Mutual Fund launches 'Silver ETF’ and ‘Silver Fund of Fund’: Key things to know about the NFOs

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By CNBCTV18.com Sep 02, 2022, 05:45 PM IST (Updated)

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Both the funds will be benchmarked against the LBMA Silver daily spot AM fixing price and both new fund offers (NFOs) will be available for subscription till September 15, 2022.

Axis Mutual Fund, one of the asset management companies in India, on Friday announced the launch of Axis Silver ETF (an open ended scheme replicating/tracking domestic price of Silver) and Axis Silver Fund of Fund (an open ended fund of fund scheme investing in units of Axis Silver ETF).

Both the funds will be benchmarked against the LBMA Silver daily spot AM fixing price and both new fund offers (NFOs) will be available for subscription till September 15, 2022.

Fund managers

Pratik Tibrewal, Fund Manager, Commodities will be managing the Axis Silver ETF and Aditya Pagaria, Fund Manager, Fixed Income will be managing the Axis Silver FoF.

Minimum application amount

The minimum application amount for Axis Silver ETF is Rs 500 per application and in multiples of Re 1/- thereafter. For Axis Silver FoF, the minimum application amount is Rs 500 and in multiples of Re 1/- per application in the ETF and Rs 5,000 and in multiples of Re 1/- thereafter in the FoF.

Investing in silver

As a precious metal, silver has always found a place of significance in the Indian culture. However, investing in silver in its physical form may pose challenges with respect to corrosion over time, safety, purity of the metal, liquidity risk etc.

So, it’s better if investors opt to gain exposure to the precious metal via an ETF (Exchange Traded Fund) that aims to generate returns in line with the performance of physical silver in domestic prices, subject to tracing error. Investors who do not have a Demat account can gain exposure by investing in Silver FoF (Fund of Fund), the fund house said.

Fundamental drivers of silver market

A versatile metal, silver has widespread usage across multiple sectors, thereby creating a unique opportunity for investors. A testament to its growing importance is that it has gained increased acceptance even in industries like Bio Pharma and Medical Technologies, Power Generation and Clean Energy, and Electric Vehicles and Mobility Technologies by powering new-age technologies to solve global challenges, according to the AMC.

Furthermore, silver not only provides diversification to the portfolio but also has the potential to provide a hedge against inflation. One of the key factors that make the economic outlook of silver promising is the expected rise in its demand going forward outpacing supply.

Features of Axis Silver ETF and Axis Silver FoF

  • Funds will invest in industry standard 30 kg Physical silver bullion of 999 parts per 1000 fineness
  • Purchase/sale of Silver done with reputed institutions and bullion traders to ensure minimal trading costs and quality
  • Hassle free ownership in Demat form
  • Storage, transport and insurance hassles of Silver taken care by Axis AMC
  • Exchange liquidity – Investors can buy and sell ETF units on NSE at their convenience

Chandresh Nigam, MD & CEO, Axis AMC said, “Silver’s interesting proposition wherein it has the ability to act as an industrial commodity as well as a precious metal is one of the key factors that we believe will drive its significance. Now that investors have access to investing in Silver via ETFs, it will further increase the metal’s value as a promising asset class in the future. With the launch of Axis Silver ETF and Axis Silver FoF, we aim to seamlessly integrate available market opportunities with an investment strategy that allows investors to gain distinctive exposure to the metal.”

Product labelling and riskometer

(Source: Axis MF)

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