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HDFC Silver ETF Fund of Fund is an open-ended Fund of Fund scheme investing in HDFC Silver ETF. Here are key things to know about the NFO
HDFC Asset Management Company Ltd (HDFC AMC) has announced the launch of the HDFC Silver ETF Fund of Fund (FoF). This is an open-ended Fund of Fund scheme investing in HDFC Silver ETF. The captioned new fund offer (NFO) will close for subscription on October 21, 2022.
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The fund is available for all since a Demat account is not required. Smart investment options like Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs) are also available, the fund house said.
About the NFO
According to HDFC Mutual Fund, the fund encourages investors to get exposure to silver due to its multi-purpose utility. It provides an opportunity to leverage the greater adoption of silver for new-age technologies – solar power, electric vehicles, and to industrial use cases from electrical switches to chemical-producing catalysts while hedging against currency risk.
|Type||An open-ended fund of funds scheme investing in units of silver exchange-traded funds.||Category||Fund of Funds|
|Minimum Investment||Rs 500 and in multiples of Re 1 thereafter.||Face Value||Rs 10/- per unit|
|Entry Load||Not Applicable||Exit Load||2% is payable if units are redeemed/switched-out within 6 months from the date of allotment.|
|% is payable if units are redeemed/switched-out after 6 months but within 1 year from thedate of allotment. No exit load if units are redeemed/switched-out after 1 year from the date of allotment|
|Fund Manager||Krishan Kumar Daga||Benchmark Index||London Bullion Market Association (LBMA) Price of Silver|
|Issue Closing Date||October 21|
What exactly is a silver ETF Fund of Fund?
The fund of funds (FoFs) deliver returns that correspond to the performance of the underlying schemes of a silver exchange-traded fund (ETF).
The investment objective of HDFC Silver ETF FOF is to seek capital appreciation by investing in units of HDFC Silver ETF. However, there is no assurance that the investment objective of the scheme will be realized, the AMC said.
Commenting on the launch, Navneet Munot, Managing Director and Chief Executive Officer of HDFC Asset Management Co. Ltd, said, “HDFC AMC believes in understanding the consumers’ needs and aims to offer them easy and effective solutions for investments. The HDFC Silver ETF FOF will provide investors with the opportunity to invest in silver which serves dual utilities of being a precious metal and an industrial commodity.”
Is it worth investing?
According to the AMC, investing in physical silver and storing it safely could be difficult for an individual. Hence, HDFC’s Silver ETF FOF NFO allows investors to get exposure to silver through mutual funds, thereby eliminating the need to store silver physically.
"Festive times such as the upcoming Dhanteras are an especially good time to invest in this auspicious metal," the AMC said.
Manish Banthia, Senior Fund Manager - Fixed Income at ICICI Prudential AMC, said that silver looks attractive now after prices have corrected over the last few months.
"The gold-silver ratio also indicates that silver is attractively placed," Banthia said.
According to Motilal Oswal, silver has wide industrial applications and generally does well during business recovery periods.
Hence, exposure to silver helps portfolios do well in both turbulent times and during recovery periods.
Why are silver prices rising?
Earlier in the year, white metal or silver’s prices declined due to a global rise in interest rates, major currencies weakening against the dollar and sluggish economic growth.
"The recent rise in silver can, however, be attributed to an earlier decline of up to 12 percent, now being corrected due to global cues. Also, there are all sorts of bullion that attract attention/buying in times of sharp volatility," Anil Chopra, Group Director at Bajaj Capital, said.
First Published: Oct 12, 2022 12:36 PM IST