This is after the markets regulator SEBI laid down operating norms for silver ETFs in late November. Once the regulator gives its nod, the fund houses will open their schemes to investors.
Many investors use gold and silver as part of asset allocation for their portfolios and to hedge against rising inflation. While gold ETFs were present, investors could buy silver only in physical form so far.
“In asset allocation, silver ETF can be used to diversify your portfolio as it has a historically lower correlation with stocks/bonds,” says Swarup Mohanty, Chief Executive Officer, Mirae Asset Mutual Fund. Mohanty points out that both gold and silver are used by investors to protect portfolios against inflation.
Post the pandemic, investors’ demand for physical precious metals (particularly gold and silver) has increased because they are presumed to provide a safe haven, especially at times of uncertainty.
Demand for silver is also influenced by industrial users, thus may also contribute towards the performance of silver ETF and benefit the investor, say financial planners.