Kotak Mahindra AMC Launches Silver ETF; Read More

Kotak Mahindra Asset Management Company Ltd (KMAMC) is set to launch its open-ended silver exchange-traded fund (ETF). The Kotal Mahindra AMC said that their new investment is meant to provide investors with an opportunity to hedge against ongoing economic difficulties and uncertainties. It will also help with the geopolitical risks prevalent across several major global economies.

The New Fund Offering (NFO) will open for subscription for all investors on November 21, 2022. It will close on December 5, 2022 and will be available for continuous repurchase and redemption after that. For investors, there will be no loads, the fund house stated.

Moreover, Kotak Mahindra AMC Group President and Managing Director, Nilesh Shah said that the silver ETF launch is in line with their continued efforts 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, he added. 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, Mr Shah mentioned.

As per the fund house, 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. Furthermore, the scheme may also participate in silver-related instruments. Similarly, Exchange Traded Commodity Derivatives (ETCDs) having silver as the underlying shall be considered as a Silver related instruments for Silver ETFs.

Most importantly, the mutual fund product will provide investors with an amazing opportunity to invest in this precious metal without physically holding it. This will help the investors gain better returns in the future.

Kotak AMC also stated that the creation size for this ETF will consist of 30,000 units. Accordingly, 1 unit will represent 1 gram of silver. This will help investors who want the flexibility to invest in smaller quantities.

Moreover, while comparing this ETF to physical silver, the official authority, Kotak AMC mentions that this ETF will have a lower transaction cost as compared to the transaction cost incurred on buying physical silver in the market.

As per World Silver Survey 2022, the demand for silver has outstripped supply due to an uptick in industrial activity and a surge in retail investor appetite for the metal, after the pandemic. Also in 2021, there were record inflows into silver exchange-traded products as investors noticed silver giving 43% absolute returns in a five-year time period. However, past performance can’t predict future performance. It may or may not sustain in the future.

Now, there are many reasons you can consider this investment option. Investing in this silver ETF is easier and even safer than buying its physical form. It will provide easy liquidity and flexibility to invest in small quantities. Moreover, you don’t need to worry about keeping the precious metal in your home or bank locker. At the same time, it offers lower transactional costs as compared to physical silver.