NFO Analysis: Nippon India Silver ETF
Nippon India Mutual Fund is launching the Silver ETF which is an open-ended fund that seeks to track and generate returns corresponding to the performance of physical silver.
Nippon India Mutual Fund offers various types of schemes such as equity-oriented, debt-oriented, hybrid, retirement funds, index funds, FoFs and ETFs. The quarterly average AUM of Nippon India Mutual Fund is Rs 2,82,41,582.78 crore as of December 2021, which is launching the Silver ETF. This is an open-ended fund that seeks to track and generate returns corresponding to the performance of physical silver.
Subscription Date: The NFO was launched on January 13, 2022, and will close on January 27, 2022.
Objectives of the scheme: The investment objective of the scheme is to generate returns that are in line with the performance of physical silver in domestic prices, before expenses, subject to tracking errors.
Investment Strategy: This is a passively managed exchange-traded fund that will utilize an investment approach designed to track the performance of the Domestic Price of Silver. The scheme seeks to achieve this goal by investing at least 95 per cent of its total assets in physical silver and silver related instruments. The scheme may also invest in cash and cash equivalents and money market instruments to meet the liquidity and expense requirements.
Asset Allocation:
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Instruments
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Minimum
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Maximum
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Risk Profile
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Physical Silver and Silver Related Instruments (This will also include Exchange Traded Commodity Derivatives (ETCDs) where participation will be limited to derivatives contract in Silver)
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95%
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100%
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Medium to High
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Money Market Instruments including Tri-Party Repo on Government securities or Treasury bills, cash & cash equivalents
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0%
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5%
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Low to Medium
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Benchmark Index: Domestic price of Silver (based on London Bullion Market Association Silver daily spot-fixing price)
Metal Purity: The scheme will invest in physical silver bars having 99.9 per cent silver purity.
Fund Manager: Vikram Dhawan
This fund will be suitable for investors with medium to high-risk profiles as the fund manager will allocate the capital towards Physical Silver and Silver Related Instruments and a very small proportion towards money market instruments. Investors who are willing to diversify their portfolios and wants the exposure of silver can consider investing in this fund. NFO is not the best option to invest in as there is no historical data available to track the performance. As this is a new theme that the fund is offering, before you invest in this fund it’s better to wait for at least a year to look at the performance. Investors who are willing to invest should have a high-risk appetite.