Silver ETFs (Exchange-Traded Funds) and ETCs (Exchange-Traded Commodities) let people invest in silver without owning physical silver. These funds follow the market price of silver, with ETFs often backed by real silver and ETCs sometimes backed by futures contracts. This makes it easy for investors to buy and sell shares of silver on the stock exchange, saving on storage and security costs. Silver ETFs and ETCs are popular because they offer flexibility, allowing investors to diversify their portfolios and add a layer of protection against inflation or economic uncertainty with a simple, valuable asset. In this blog we will look at some of the best Silver ETFs, their feature about Silver ETFs, how they work, things to consider while investing, and so on.
Best Silver ETFs in India
Here is a table of some popular silver ETFs, related funds available in India, and their fund symbols.
| Name | Fund Symbol |
| Nippon India Silver ETF | SILVERBEES |
| Kotak Nifty PSU Bank ETF | KOTAKPSUBK |
| ICICI Prudential Silver ETF | SILVERIETF |
| Nippon India ETF PSU Bank BeES | PSUBNKBEES |
| UTI Silver ETF | UTISILVER |
| DSP Silver ETF | DSPSILVER |
| Mirae Asset NYSE FANG+ ETF | MAFANG |
| Invesco India Gold ETF | IVZINGOLD |
| Bharat Bond ETF – April 2030 | EBBETF0430 |
| Bharat Bond ETF – April 2031 | EBBETF0431 |
Note: The mention of “Bharat Bond ETF – April 2030” and “Bharat Bond ETF – April 2031” in the table of the best ETFs in India for 2024 indicates that these ETFs have fixed maturity dates. This means they are designed to mature in the specified years, providing investors with a predictable timeline for their investment returns.
Nippon India Silver ETF
Tracks the performance of physical silver by investing in physical silver and silver-related instruments.
NAV: ₹86.0628
Expense Ratio: 0.56%
Minimum Lump Sum Investment: ₹1,000
Kotak Nifty PSU Bank ETF
It aims to provide returns that closely correspond to the total returns of the Nifty PSU Bank Index, subject to tracking errors.
NAV: ₹682.9905 (as of November 11, 2024)
Expense Ratio: 0.49%
Minimum Lump Sum Investment: ₹10,000
ICICI Prudential Silver ETF
Seeks to provide returns that closely track the performance of physical silver by investing in physical silver and silver-related instruments.
NAV: ₹88.81 (as of November 8, 2024)
Expense Ratio: 0.40%
Minimum Lump Sum Investment: ₹100
Nippon India ETF PSU Bank BeES
It aims to provide investment returns that closely correspond to the returns of the Nifty PSU Bank Index, subject to tracking errors.
NAV: ₹417.50 (as of November 8, 2024)
Expense Ratio: 0.49%
Minimum Lump Sum Investment: ₹10,000
UTI Silver ETF
Seeks to provide returns that closely track the performance of physical silver by investing in physical silver and silver-related instruments.
- NAV: ₹90.16 (as of November 8, 2024)
Expense Ratio: 0.52%
Minimum Lump Sum Investment: ₹5,000
DSP Silver ETF
It aims to provide returns that closely correspond to the performance of silver by investing in physical silver and silver-related instruments.
- NAV: ₹88.81 (as of November 8, 2024)
- Expense Ratio: 0.40%
- Minimum Lump Sum Investment: ₹5,000
Mirae Asset NYSE FANG+ ETF
Seeks to provide returns that closely correspond to the performance of the NYSE FANG+ Total Return Index, subject to tracking errors.
- NAV: ₹104.0655 (as of November 8, 2024)
- Expense Ratio: 0.33%
- Minimum Lump Sum Investment: ₹5,000
Invesco India Gold ETF
Aims to provide returns that closely correspond to the performance of gold by investing in physical gold and gold-related instruments.
- NAV: ₹44.50 (as of November 8, 2024)
- Expense Ratio: 0.50%
- Minimum Lump Sum Investment: ₹5,000
Bharat Bond ETF – April 2030
Seeks to track the Nifty Bharat Bond Index – April 2030, which comprises AAA-rated public sector companies, aiming for returns corresponding to the total returns of the index.
- NAV: ₹1,100.00 (as of November 8, 2024)
- Expense Ratio: 0.0005%
- Minimum Lump Sum Investment: ₹1,000
Bharat Bond ETF – April 2031
Aims to track the Nifty Bharat Bond Index – April 2031, consisting of AAA-rated public sector companies, seeking returns corresponding to the total returns of the index.
- NAV: ₹1,100.00 (as of November 8, 2024)
- Expense Ratio: 0.0005%
- Minimum Lump Sum Investment: ₹1,001
Note: The NAVs and expense ratios are based on the latest available data as of November 8, 2024. It’s advisable to verify the current figures before making investment decisions.
Understanding How Silver ETFs Work
Silver ETFs (Exchange-Traded Funds) are investment funds that let you invest in silver without physically owning it. Here’s how they work:
1. Asset Backing: Silver ETFs are backed by either physical silver or futures contracts. Funds holding physical silver buy and store actual silver in secure vaults.
2. Unit Shares: Investors buy units or shares of the ETF, which represent a portion of the fund’s holdings in silver.
3. Trading on Stock Exchanges: Silver ETFs are listed on major stock exchanges (e.g., NSE in India), where they can be bought and sold like regular stocks during market hours.
4. Price Tracking: The ETF’s price typically mirrors the price of silver closely, minus any fund management fees or tracking errors.
5. Dividends and Returns: Unlike stocks, silver ETFs don’t pay dividends since they’re tied to the metal’s value.
Features of Silver ETFs
Silver ETFs offer unique features that make them an attractive investment option for those looking to gain exposure to silver without the complexities of physical ownership. Here are some of the features of Silver ETFs:
Liquidity: Silver ETFs are easy to buy and sell on exchanges, offering good liquidity.
Cost-Effective: They eliminate the costs associated with buying and storing physical silver.
Transparency: Silver ETFs typically track the price of silver accurately, allowing for easy performance monitoring.
Convenient Access: ETFs can be traded anytime during market hours, providing easy access to silver investment.
Types of Silver ETFs
Various types of silver ETFs are available in the market, each catering to different investment strategies and preferences.
1. Physical Silver ETFs: These funds hold physical silver as their underlying asset. They directly reflect the price of silver in the market.
2. Futures-Based Silver ETFs: These ETFs invest in silver futures contracts instead of physical silver. They can be more volatile but are a way to leverage silver price movements.
Things to Consider Before Investing in Silver ETFs
Before investing in silver ETFs, evaluating several factors that can influence your investment’s performance and align with your financial goals is essential.
1. Investment Goals: Determine whether silver ETFs align with your long-term or short-term goals.
2. Expense Ratio: Check the fund’s expense ratio, as lower costs can positively impact overall returns.
3. Tracking Error: Look at how closely the ETF tracks the price of silver. Smaller tracking errors indicate better performance.
4. Market Volatility: Silver prices can fluctuate, so be prepared for some volatility in ETF prices.
5. Risk Tolerance: Silver ETFs are a safer option than futures contracts but can still be volatile compared to stocks or bonds.
Factors Affecting Silver ETFs
Understanding the factors that affect silver ETFs is crucial for making informed investment decisions and anticipating market movements:
1. Silver Demand and Supply: Industrial demand (electronics, solar panels) and supply limitations directly impact silver prices.
2. Economic Conditions: Economic downturns often increase the demand for silver as a safe haven, influencing ETF values.
3. Interest Rates: Rising interest rates can decrease the appeal of silver ETFs as investors move toward fixed-income assets.
4. Global Events: Political events and trade restrictions can affect silver production and prices.
5. Currency Value: As silver is typically priced in USD, fluctuations in currency exchange rates can impact silver ETF values in India.
Important SEBI Rules For Silver ETFs In India
The Securities and Exchange Board of India (SEBI) has established specific guidelines for Silver Exchange Traded Funds (ETFs) to ensure transparency and protect investors. Key regulations include:
1. Investment Composition:
-Silver ETFs must invest at least 95% of their assets in physical silver or silver-related instruments.
-Investments in silver-based derivatives (ETCDs) are allowed but capped at 10% of the fund’s assets.
2. Physical Silver Standards:
– Silver holdings must be in 30 kg bars with 99.9% purity, meeting LBMA Good Delivery Standards.
3. Valuation and Net Asset Value (NAV):
– Silver should be valued according to the Eighth Schedule of SEBI (Mutual Funds) Regulations.
– Silver ETF NAVs must be disclosed daily on the AMC’s website and calculated to four decimal points.
4. Tracking Error and Difference:
– The tracking error, showing the difference between ETF and silver returns, should stay below 2% annually.
– Both tracking error and tracking difference must be disclosed monthly on the AMC’s website.
5. Benchmarking:
– Silver ETF schemes should be benchmarked against the price of silver based on the LBMA Silver daily spot-fixing price.
Conclusion
Investing in silver ETFs offers an easy and efficient way to gain exposure to silver without the hassles of physical storage. They are ideal for investors seeking diversification and a hedge against inflation. By understanding how silver ETFs work, knowing what factors impact their prices, and following essential investment tips, you can make informed choices and potentially benefit from the value that silver ETFs bring to your portfolio.
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Frequently Asked Question
Q. Is silver ETF a good investment?
A. Silver ETFs can be a good investment for exposure to silver without the need for physical storage, though their suitability depends on your financial goals and risk tolerance.
Q. How do silver ETFs differ from physical silver investments?
A. Silver ETFs track the price of silver but don’t involve owning physical silver, eliminating storage concerns but lacking the tangibility of physical silver.
Q. Are there any tax implications for investing in silver ETFs?
A. Yes, silver ETFs are generally taxed as collectibles in some regions, potentially incurring higher capital gains taxes compared to stocks or bonds.
Q. How can I buy and sell silver ETFs?
A. Silver ETFs can be bought and sold on stock exchanges through brokerage accounts, similar to buying stocks.
Q. What are the fees associated with silver ETFs?
A. Fees generally include management expenses, known as the expense ratio, which vary but typically range from 0.2% to 0.5%.
Q. Can silver ETFs provide diversification for my investment portfolio?
A. Yes, silver ETFs can add portfolio diversification as silver often behaves differently from stocks and bonds, helping balance overall risk.
Q. What are the risks involved with investing in silver ETFs?
A. Risks include price volatility, potential high tax rates, and the ETF’s dependence on the performance of the underlying silver market without physical ownership.
Q. How do silver ETFs compare to other precious metal ETFs?
A. Silver ETFs focus solely on silver, which has different industrial and investment demand drivers compared to gold or platinum ETFs.
Q. What is the historical performance of leading silver ETFs?
A. Historical performance varies but generally mirrors the price movement of silver, with price increases during periods of economic uncertainty or rising inflation.
