SBI Mutual Fund has introduced a new fund offering (NFO) - the SBI Silver ETF. This exchange-traded fund provides investors with an opportunity to gain exposure to silver, a precious metal known for its industrial and investment demand. Investors also have an option to invest in the Fund of Funds (FoF) of this ETF.
- Fund Name: SBI Silver ETF
- NFO Period: June 27, 2024 to July 5, 2024
- Benchmark Index: Domestic price of physical silver
- Minimum Investment: ₹500 (lump sum)
The primary objective of the SBI Silver ETF is to generate returns that closely correspond to the performance of silver, subject to tracking errors. The fund aims to achieve this by investing in physical silver and silver-related instruments.
1. Diversification: Silver provides diversification to traditional equity and bond portfolios.
2. Hedge Against Inflation: Silver often acts as a hedge against inflation and currency devaluation.
3. Industrial Demand: Silver has extensive industrial applications, which supports its demand and price stability.
The fund will follow a passive investment strategy, aiming to replicate the price movement of physical silver. This involves holding silver bullion and investing in silver-related instruments. You can invest in the ETF directly or through the SBI Silver ETF FoF.
Also read: What is a Fund of Funds (FoF)?
- Physical Silver and Silver-Related Instruments: 95-100%
- Debt and Money Market Instruments: 0-5% (for liquidity management)
The SBI Silver ETF is suitable for:
- Investors seeking exposure to precious metals.
- Those looking to diversify their investment portfolio.
- Investors aiming to hedge against inflation and market volatility.
1. Direct Exposure to Silver: Offers a convenient way to invest in silver without the need to physically hold the metal.
2. Liquidity: Being an ETF, it can be easily bought and sold on stock exchanges.
3. Lower Costs: Typically, ETFs have lower expense ratios compared to actively managed funds.
1. Market Risk: The fund is subject to fluctuations in silver prices.
2. Tracking Error: The fund’s performance may slightly deviate from the benchmark due to tracking errors.
3. Regulatory Risks: Changes in government regulations regarding precious metals could impact the fund.
The SBI Silver ETF offers an excellent opportunity for investors to diversify their portfolios and gain exposure to silver, through the ETF or their mutual fund investment. With its focus on the price movement of physical silver, the fund aims to provide stable returns. As with any investment, potential investors should consider their risk tolerance and investment objectives before investing.
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