Aditya Birla Sun Life MF announces the launch of Silver ETF

Aditya Birla Sun Life Mutual Fund is all set to launch its Silver ETF and FoF. Read on to find out more.

After ICICI Prudential MF launched its Silver ETF, we have others joining the race. Ahead of them all is Aditya Birla Sun Life Mutual Fund who has announced the launch of its Silver Exchange Traded Funds (ETF) and Fund of Funds (FoF). It is an open-ended ETF that invests in physical silver having 99.9 per cent purity. This scheme aims to generate returns that are in line with the performance of the physical silver in domestic prices, subject to any tracking error. The New Fund Offer (NFO) would open on January 13, 2022, and close on January 27, 2022. Having said that, is it the right time to have exposure to silver? We shall find out the same in this article.  

We have always seen silver around us at our home, especially during special occasions such as Diwali and Makar Sankranti. As Makar Sankranti is nearing, the fund houses have tactically launched their Silver ETFs to ensure that people understand the benefits of investing in digital silver. However, the use of silver is not just restricted to domestic use. Its use is widespread, unlike gold. At present the silver is used in wires, water purifiers, air purifiers, solar panels and Electric Vehicles, to name a few. In fact, in future, the use of silver would be more evident in renewable energy, electronic gadgets, space technology, etc.  

Looking at its demand and supply economics, then they continue to remain mismatched as demand is rising by 15 per cent p.a. while supply is rising only 8 per cent p.a. Speaking about the household demand the it is back to the pre-pandemic levels, whereas industrial demand from new industries such as energy (solar) and automotive (electric vehicles and batteries) is increasing at a rapid pace. This is amid the fact that governments around the globe remain committed to Paris Accord and COP26. 

Though the performance of the silver is not encouraging when compared to Nifty 50, but it does act like good hedge against it. Moreover, its correlation with Nifty 50 TRI is as low as 0.11, which means that silver and equity markets are not correlated with each other.