Gold, Silver ETFs: Edelweiss Mutual Fund rolls out India’s first gold, silver fund. Details here

When it comes to investment, mutual funds are considered to be the safest as they fetch high returns depending on the tenure. One such scheme that promises lucrative returns by investing in precious metals was launched by Edelweiss Asset Management Limited on Wednesday. The Edelweiss Gold and Silver ETF Fund of Fund is the first scheme in India, which aims to invest in both gold and silver metals. The offer was launched on Wednesday, August 24, and will be open till September 7, 2022. The fund will be managed by Bhavesh Jain and Bharat Lahoti. Gold ETFs are passive investment tools that are based on gold prices.

Scheme highlights 

The main objective of this scheme is to invest in Gold ETFs and Silver ETFs and generate returns. Investing in gold is a hedge against inflation, and has worked out on most occasions of slowdowns, inflation, geopolitical tensions, and economic downturns in the past, as per experts.   

The Edelweiss Gold and Silver ETF Fund of Fund is an open-ended scheme. The minimum investment amount is Rs 5,000, thereafter one can do it in multiples of Re 1 through lump sum mode. Investors can also start a SIP with a minimum investment of Rs 500.  A Fund of Funds (FoF) can be defined as a pool of funds, which together invest in funds mainly mutual and hedge funds, rather than investing in securities in a direct way. The scheme will initially invest in both the metals equally and will periodically adjust the percentage depending on the performance. 

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Other similar schemes 

Gold-based ETF Nippon India ETF Gold BeES was the first gold-based fund in India, which was launched in 2007. On the other hand, The silver-based ETFs got a go-ahead only last year when the Securities and Exchange Board of India (Sebi) allowed the launch of silver exchange-traded funds. At that time, five MF majors, ICICI Prudential AMC, Nippon India AMC, Aditya Birla Sun Life AMC, DSP Mutual Fund, and HDFC AMC, announced their plans to launch silver ETFs. ICICI Prudential AMC launched its Silver ETF scheme in January 2022, which is the first silver-based fund in India. 

Investment in gold and silver 

This is a well-known fact that gold and silver provide a good hedge against inflation, and have outperformed other assets in the past. According to analysts, gold performs well during an economic downturn, or recession, while silver outperforms during precious metal bull rallies.  

According to IMF data, the value of gold increased by 26.1, 31.7, and 11.3 per cent, respectively, during the recessions and market downturns of 2008, 2011, and 2016. 

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Experts have also said that precious metal prices are inversely related to the US dollar, as the dollar gets stronger, gold loses its shine. Therefore, one has to look into domestic and global factors before investing money.  

However, experts have noted that though silver is an important metal due to its heavy usage in industrial and manufacturing sectors, it is more volatile than silver and one should go slow while investing in silver funds.