ICICI Prudential Mutual Fund silver ETF will open for subscription on January 5

Asset management firm ICICI Prudential Mutual Fund has announced the launch of the country’s first silver ETF which will invest in physical silver and silver-related instruments.

The new fund offering (NFO) will open for subscription on Jan. 5 and close on Jan. 19, according to documents.

In addition, a group of asset management companies are lining up to launch their silver ETFs and have filed documents with market regulator Sebi for approval in this regard.

HDFC Mutual Fund, Nippon India Mutual Fund, Mirae Asset Investment Managers, Aditya Birla Sun Life Asset Management Company and DSP Mutual Fund are among the fund companies that have applied for silver ETFs.

This comes after Sebi published operating standards for the introduction of silver ETFs in November. According to the rules, these ETFs must invest at least 95% of their net assets in silver and silver-related instruments.

The ICICI Prudential Silver ETF is an open program that will track domestic silver prices. The program will invest its proceeds in physical silver and silver-linked instruments.

The investment objective of the program is to generate returns in line with the performance of physical silver in national prices, as derived from LBMA (London Bullion Market Association) AM fixing prices.

Unlike holding physical silver, the fund house said an investor can benefit from investing in silver ETFs because it offers more liquidity and lower storage costs.

“We believe that the silver ETF will be one of the preferred ways for investors to gain exposure to silver, as there is no need to worry about the bulky nature of silver, the purity, quality or liquidity of the investment,” Chintan Haria, Head of Products and Strategy, ICICI Prudential Mutual Fund, said.

He further stated that silver is among the preferred options globally when it comes to investing in precious metals. Indeed, silver is considered a store of value, a hedge against inflation and has a very limited correlation with other asset classes.

On Thursday, DSP Mutual Fund filed the draft scheme disclosure document with Sebi for DSP Silver ETF – an open-end exchange-traded fund replicating domestic price tracking of the precious metal.

Dolores W. Simon