DSP Mutual Fund announced the launch of its new open-ended scheme, the DSP Silver ETF Fund of Fund, designed to offer investors a convenient and structured way to gain exposure to silver through the mutual fund route. This Fund of Fund will primarily invest in units of DSP Silver ETF, providing returns that closely correspond to the performance of physical silver in domestic markets.
Silver as a commodity plays a crucial role in various industries such as electronics, automotive, power, and jewelry, with demand expected to rise due to the global shift towards renewable and cleaner energy sources. Supply growth for silver has been limited, and recent years have shown a consistent supply deficit. The year 2025 could be the fifth year running where demand for silver could be more than the supply. And this supply deficit could be more than 20% of annual demand. In the past, when such deficits occurred, even a small incremental increase in investment demand for silver can lead to a rise in prices. Indian investors may also benefit from currency depreciation, as silver is priced in USD. Over time, silver prices in INR have outperformed those in USD, providing an additional advantage when the rupee weakens.
The DSP Silver ETF Fund of Fund offers the advantage of owning the metal in a convenient digital form without the requirement for a demat account to transact. It also presents a systematic way to invest in Silver via SIPs along with the flexibility of redeeming the units without any lock-in period.
"During geopolitical tensions and uncertainties, precious metals like silver and gold present a safe haven for investors. Precious metals are also a good inflation hedge for investors who fear that trade wars and tariff tensions would cause high inflation. But besides such investment demand, more than 50% of the annual demand for Silver is for industrial use. Such industrial use of silver in EVs, solar panels and 5G networks is likely to grow even more, as nations across the world move towards cleaner energy and newer technologies. If we see the current Gold/Silver ratio and compare it to long term history, the prices of silver appear relatively undervalued, which could indicate a potential for silver to outperform. However, investors should expect fluctuations in short-term returns" said Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund.
"With the launch of DSP Silver ETF Fund of Fund, we are making it even simpler for investors to access silver as an asset class through the mutual fund platform. Our aim is to provide a transparent, liquid, and cost-effective solution for those seeking diversification and long-term growth potential through commodities," said Diipesh Shah, Fund Manager of DSP Silver ETF Fund of Fund. |
