Silver ETFs registered an unprecedented surge with the Assets under Management (AUM) growing by over four-fold to touch Rs 12,331 crore in October 2024, up from Rs 2844.76 crore in October 2023.
FinTech BizNews Service
Mumbai, November 22, 2024: Silver sales witnessed a sharp spike ahead of Dhanteras this year and investors were not just buying it in physical form but were also investing in ETFs (Exchange Traded Funds). Silver ETFs registered an unprecedented surge with the Assets under Management (AUM) growing by over four-fold to touch Rs 12,331 crore in October 2024, up from Rs 2844.76 crore in October 2023. While gold ETFs have been in the market for quite some time now, Silver ETFs, which were launched as recently as 2022, have managed to garner attention of the investors within a reasonably short period of time as it is more accessible and transparent for retail investors, said ICRA Analytics.
Interestingly, the total number of folios under Silver ETFs increased by nearly 215 per cent to touch 4.47 lakh in October 2024, up from 1.42 lakh in the same period last year. Net inflows grew by 24 per cent at Rs 643.10 crore in October 2024, as against Rs 518.02 crore last year.
According to Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, number of Silver ETFs, which stood at 8 in April 2023, has increased to 12 in August 2024. If domestic inflationary pressures and geopolitical instability continue to persist, then silver may continue to witness upbeat demand. The market may see the launch of more Silver ETFs in the coming months as its role in investor portfolio diversification, investment and management becomes more crucial.
“Silver ETFs managed to garner attention of the investors within a short period of time. It is being increasingly preferred over physical form as investing in physical silver is challenging due to storage related issues. Moreover, buying of physical silver may incur GST costs which unregistered dealers may have to pay out of pocket. Investing in silver ETFs is relatively easy compared to that of traditional methods of investment in physical silver and they have better liquidity compared to that of the physical options as they are listed on the exchange thereby allowing investors to buy and sell units easily. Lastly, price efficiency of Silver ETFs is better compared to traditional physical options,” Kumar said.
| Average Returns (in %) | |||
| 1 Month | 3 Months | 6 Months | 1 Year |
Silver ETFs | 7.57 | 16.02 | 20.25 | 32.49 |
* Less than 1 year Absolute returns, Greater than or Equal to 1 year Compound Annualized returns Returns as on October 31, 2024 | ||||
The average returns for a 1-month, 3-months, 6-months and 1-year period was in the range of 7.57 per cent, 16.02 per cent, 20.25 per cent and 32.49 per cent respectively. This is in contrast to an average return of 5.32 per cent, 14.29 per cent, 1029 per cent and 28.07 per cent generated by Gold ETFs over 1-month, 3-months, 6-months and 1-year duration respectively.
| Absolute | Compound Annualized | ||
Scheme Name | 1 Month | 3 Months | 6 Months | 1 Year |
Aditya Birla Sun Life Silver ETF | 7.62 | 16.05 | 20.03 | 32.61 |
Axis Silver ETF | 7.60 | 16.04 | 21.98 | 31.43 |
DSP Silver ETF | 7.59 | 16.04 | 20.09 | 32.57 |
Edelweiss Silver ETF | 7.56 | 15.95 | 19.83 |
|
HDFC Silver ETF | 7.58 | 15.97 | 22.53 | 33.00 |
ICICI Prudential Silver ETF | 7.61 | 16.05 | 19.99 | 32.57 |
Kotak Silver ETF | 7.60 | 16.03 | 19.96 | 32.49 |
Mirae Asset Silver ETF | 7.57 | 15.96 | 19.87 | 32.36 |
Nippon India Silver ETF | 7.58 | 15.94 | 19.82 | 32.27 |
SBI Silver ETF | 7.56 | 15.92 | -- | -- |
Tata Silver Exchange Traded Fund | 6.86 | 15.43 | 19.53 | -- |
UTI Silver Exchange Traded Fund | 8.07 | 16.80 | 19.17 | 33.13 |
* Less than 1 year Absolute returns, Greater than or Equal to 1 year Compound Annualized returns. Returns as on October 31, 2024
“Silver prices are expected to remain attractive as the expectation is that the U.S. Federal Reserve will continue to cut interest rates in the coming months giving a boost to silver prices. Besides, geopolitical tensions may prompt risk averse investors to invest in safe-haven assets like silver. Demand for silver is expected to remain upbeat due to its usage in electronics and green technologies. Moreover, investors often prefer investment in silver for portfolio diversification and it is often seen as a hedge against inflation. This apart, cut in customs duty and change in taxation structure has made silver investment more attractive,” Kumar added.
