DSP Mutual Fund Launches DSP Silver ETF FOF
DSP Mutual Fund announced the launch of new fund offer (NFO) of its open-ended scheme, the DSP Silver ETF Fund of Fund. This scheme aims to offer investors a convenient and structured way to gain exposure to silver through the mutual fund route. This Fund of Fund (FOF) will primarily invest in units of DSP Silver ETF, providing returns that closely correspond to the performance of physical silver in domestic markets.
The NFO has opened for subscription and will close on 9th May 2025.
Silver is a preferred precious metal after gold for most investors. As an industrial metal silver has many applications in various industries such as electronics, automotive, and power, with demand expected to rise due to the global shift towards renewable and cleaner energy sources. The growth in supply of silver is muted, and supply deficit has become the norm. 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. Historically such deficits led to significant rise in silver prices even with small incremental demand. Currency depreciation also impacts silver prices. Since silver is priced in US dollar terms, a weak rupee against the greenback, can add to the Indian investors’ returns. 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. Being an open-ended funds investors can also sign up for systematic investment plans into this scheme. There is no lock-in period and investors can redeem their investments at will.
“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.
As per Value Research, total 24 silver-oriented schemes including FOF manage assets worth Rs 18,228 crore. In the last one year and three years, silver funds on an average gave 16.71% and 12.98% returns respectively.