Kotak Mahindra Asset Management Company (KMAMC) is set to launch its open-ended silver exchange traded fund (ETF) with no entry or exit load.
Kotak AMC’s silver ETF has a lower transaction cost than physical silver while offering the same potential returns as the physical metal
Kotak Mahindra Asset Management Company (KMAMC) is set to launch its open-ended silver exchange traded fund (ETF) with no entry or exit load.
The fund will remain open during its new fund offer (NFO ) period from November 21 till December 5, 2022, and will be available for continuous repurchase and redemption after that.
Kotak AMC said their new investment product will provide investors with an opportunity to hedge against the ongoing economic uncertainties and geopolitical risks prevalent across several major global economies.
Nilesh Shah, group president and managing director, Kotak Mahindra AMC said: “Our silver ETF launch is in line with our continued effort to provide easy and efficient access to various asset classes. It will provide convenient access to silver as an asset, which is not only a precious metal, but also has many industrial uses. The consolidation in silver prices since the start of the year provides a good opportunity for those looking to allocate some money to this asset for diversification.”
Details Of The Fund
Kotak AMC said in a release that this particular ETF scheme may also participate in silver-related instruments, including exchange-trade commodity derivatives (ETCDs), which are having silver as the underlying asset. Investors who would want to invest in physical silver of 99.9 per cent purity (fineness) may consider investing in this ETF, since it will try to mimic the returns generated by physical silver in domestic prices, though there could always be a possibility of tracking error.
Kotak AMC further said that the creation size for this particular ETF will consist of 30,000 units where 1 unit will represent 1 gram of silver. This will help investors who want the required liquidity and the flexibility to invest in smaller quantities.
Differentiating this ETF from physical silver, Kotak AMC said that when compared to the transaction cost incurred on buying physical silver in the market, this ETF has a lower transaction cost.
This particular ETF has a ‘very high risk’ product labelling.
Silver Outlook
According to the World Silver Survey 2022, after the pandemic, the demand for silver has outstripped supply due to uptick in industrial activity and a surge in retail investor appetite for the metal.
In 2021, there were record inflows into silver ETFs, as investors saw silver giving 43 per cent absolute returns in a five-year time period.