Kotak Mahindra Asset Management Company Ltd (KMAMC) on Thursday announced the launch of its open-ended silver exchange traded fund that will provide investors an opportunity to hedge against the ongoing economic uncertainties and geopolitical risks prevalent across several major global economies.
The New Fund Offering (NFO) opens for subscription for all investors on November 21, 2022 and closes on December 5, 2022. For investors there will be no loads, the fund house said.
"The Kotak Silver ETF’s objective is to generate returns in line with the performance of physical silver in domestic prices, subject to tracking error. The scheme may also participate in silver related instruments. Exchange Traded Commodity Derivatives (ETCDs) having silver as the underlying shall be considered as Silver related instrument for Silver ETFs," it said.
However, there is no assurance or guarantee that the investment objective of the scheme will be achieved.
The units of the fund will be in the form of creation unit size or in multiples thereof. Each creation unit consists of 30,000 units of Kotak Silver ETF. Each unit is approximately equal to 1 gram of Silver.
Investing in Silver ETFs is easier and safer than buying it in its physical form, providing easy liquidity and the flexibility to invest in smaller quantities. Furthermore, it offers lower transaction costs than physical silver while delivering the market equivalent price of the metal.
As per the World Silver Survey 2022, post the pandemic, demand for silver has outstripped supply due to uptick in industrial activity and a surge in retail investor appetite for the metal. In 2021, there were record inflows into silver exchange traded products. The silver lining is that the metal has clocked 43% absolute returns in the 5-year period. However, the past performance may or may not be sustained in the future.
Nilesh Shah, Group President and Managing Director, Kotak Mahindra Asset Management Co. Ltd said, “Our Silver ETF launch is in line with our continued effort to provide easy and efficient access to various asset classes. It will provide convenient access to silver as an asset which is not only a precious metal but also has many industrial uses. The consolidation in Silver prices since the start of the year provides a good opportunity for those looking to allocate some money to this asset for diversification.”
