MF Query Board

Silver ETFs are gaining momentum in India. What should investors know before adding them to their portfolios? - Prasad Kulkarni[EasyDNNnews:PaidContentStart]

Silver ETFs (Exchange-Traded Funds) are among the newest entrants in Indian investors' portfolios, having been allowed by SEBI in November 2021. Since then, their Assets Under Management (AUM) of this category have surged remarkably.

What’s driving this rush? First, silver’s dual characteristic: it serves both as a precious metal (a store of value and safe haven) and an industrial metal (for Solar panels, electronics, etc.). Second, rising global and domestic supply constraints have added upward pressure on prices. Third, recent macroeconomic uncertainty is pushing investors toward assets beyond just equities and bonds.

But there are risks and caveats to be aware of:
■ Volatility tends to be high. Industrial demand and supply issues can swing sharply.
■ Tracking vs Premium: Some silver ETFs have recently traded at premiums over their indicative NAVs, meaning you may pay more than the underlying silver is “officially” worth.
■ Physical backing and supply chain constraints: ETFs need to hold physical silver; shortages or logistic constraints can affect how well the ETF tracks the spot silver price.

So, for whom are Silver ETFs suitable? Likely for investors who are seeking diversification, are comfortable with higher risk, and want some exposure to commodities in addition to traditional asset classes. For conservative investors or those with short-time horizons, the ups and downs can be sharp. Bottom line: Silver ETFs are a compelling option right now, especially as part of a diversified strategy. But due diligence on premium vs NAV, liquidity, fund house credibility, and economic trends is essential before making them a significant part of a portfolio.

With market volatility rising and global uncertainty persisting, are multi-asset allocation funds a good choice for investors now? - Sayed Yunu

Multi-asset allocation funds are increasingly gaining traction among investors looking to balance risk and return in a volatile environment. These funds invest across three or more asset classes—typically equity, debt, and gold (some even add REITs or international exposure) to provide a smoother investment experience compared to pure equity or Debt Funds.

The logic is simple: when equities fluctuate due to global uncertainties, bonds or gold often act as stabilisers. For instance, in 2025, while equity markets saw sharp swings due to shifting interest rate expectations and geopolitical developments, gold delivered strong returns, cushioning overall portfolio volatility. Fund managers actively rebalance allocations based on valuations, macroeconomic cues, and market trends, offering investors a dynamically managed diversified portfolio.

Another advantage is Tax efficiency, as these funds can qualify for favourable equity taxation when their equity exposure remains above the prescribed limit. This makes them appealing for investors seeking diversification without compromising on post-tax returns. Moreover, multi-asset funds eliminate the hassle of timing markets or switching between asset classes individually.

However, investors must remember that these funds are not risk-free. Equity exposure means short-term volatility remains. Also, returns may lag pure Equity Funds during prolonged bull runs, since diversification naturally caps upside potential. Hence, investors with a moderate risk appetite and a time horizon of at least three to five years can consider them for core portfolio allocation.

In summary, multi-asset allocation funds are well-suited for investors seeking a balanced, all-weather approach. In today’s uncertain environment, they offer the right mix of growth, stability, and diversification—making them a sensible choice for 2025 and beyond.

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