Silver ETFs get a go ahead from Sebi; should you invest?

In a significant move, capital market regulator Sebi has now approved an amendment to the mutual fund rules to introduce Silver ETFs. This was a long-standing demand by commodity market participants and the move comes at a time when there is a heightened retail investor interest in stock markets. Experts are welcoming the decision by Sebi as it will bring in another commodity for investors looking for investment exposure.

Currently, mutual funds are allowed to launch Exchange Traded Funds (ETFs) tracking only one commodity – gold.

Mutual fund houses in India will need to buy physical Silver bars for ETFs. Even though silver and gold work in parallel, silver has its own market dynamics. Hence, silver can be a huge success in the financial markets even for retails investors.

Should you invest in Silver ETFs?

Experts believe this will deepen the securities market for investors as Indians prefer buying gold and silver as investments and consider them as safe haven assets.

Kaustubh Belapurkar, Director – Manager Research, Morningstar India

Introduction of Silver ETFs brings in another investible commodity for investors. Silver ETFs are popular globally along with Gold and other precious metal ETFs. Investors should be judicious with their investment and allocation as silver prices like any other commodity can be volatile.

Swapnil Bhaskar, Business Head, Niyo Money

This can be the game changer as it deepens the securities market for the investors. Indians have a deep rooted love for buying gold and silver. The silver ETF will give them a seamless way of buying silver. They don’t have to worry about its purity or theft, unlike a case for physical holding of silver, as the underlying asset will be managed by the professional vault managers.

Priti Rathi Gupta, Founder, LXME

Silver has been a precious metal, after gold, to hold the eyes of investors. Being a cheaper metal compared to gold and having various applications especially in the industrial market, silver has maintained its demand over decades. Silver has been traded and has been an integral part of investor portfolios globally. In India, investors invest in silver through many ways like the traditional route- silver bars, silver coins, and silver jewellery and if they would rather not deal with physical silver, they invest through paper forms of silver too like silver futures, NSEL, etc.