DSP Investment Managers announced the launch of DSP Silver ETF which will invest in physical silver and silver-related instruments. This new ETF offers investors an easier way to buy or sell silver compared to the physical version with the freedom to trade easily.
Demand for silver is higher than supply and mainly driven by industrial, investment and jewellery.
Supply (997 million ounces) of silver depends on limited mine production capacities but demand (1049 million ounces) may potentially increase further due to its application in new age tech, among many other use cases like photovoltaic cells (solar) and as the main electrical connector material in battery packs and control modules of Electric Vehicles.
Silver offers other advantages to investors as well. It aims to hedge against a standard â€˜equity-debt portfolioâ€™ due to its low correlation with equity and negative correlation with debt. This may make it a favourable diversifier, especially in troubled times. Silver can also potentially act as leverage against the depreciating rupee. Silver in INR terms has outperformed Silver in USD due to currency depreciation. This is because silver prices in India are derived from international silver prices but are then converted after adding currency effects and other costs of landing.
Further, compared to buying expensive jewellery, silver in an ETF format gives you the flexibility to buy even with small amounts of money and that too at a relatively lower cost than most equity-oriented actively managed mutual funds.
However, investing in silver is a high-risk strategy and is more suited for experienced investors who understand precious metals or commodities cycles. Investors must be prepared to face short term fluctuations and stay resilient through such times.
The New Fund Offer for the Silver ETF opens for subscription on August 1 and closes on August 12.
â€œInvesting in silver via an ETF is a modern and smart way for investors to gain exposure to this precious metal in an easy, digital form. Increasing demand for silver in industries, newer technologies and a shift to renewable sources of energy and the safe-haven demand can also act as favourable tailwinds for the metal. However, investors should expect fluctuations in short-term returns, especially during times of market volatility. An investment in DSP Silver ETF is suitable for investors looking to diversify, or for experienced investors or those with access to expert financial advice,â€ says Anil Ghelani, CFA, Head â€“ Passive Investments & Products, DSP Investment Managers.