Silver ETFs: In 2024, Silver ETFs have become a favored investment choice, experiencing significant growth in assets under management. A study conducted by ICRA Analytics reveals that Silver Exchange Traded Funds (ETFs) have shown impressive performance, surpassing that of gold ETFs over the past year. Silver ETFs have generated returns of up to 32.49% in the past year, outpacing the 28.07% returns of gold ETFs.
This marks a notable shift, as silver, traditionally overshadowed by gold, has outperformed the yellow metal by delivering a 30% return compared to gold’s 25.5% return. The top-performing silver and gold ETFs have recorded returns of 24.64% and 33.13% respectively, reflecting the performance of the physical metals.
Silver ETFs, or exchange-traded funds, are tradable on stock exchanges. Due to their benchmark being tied to spot silver prices, investors are able to purchase them at a price closely aligned with the current market value of silver.
The Assets under Management (AUM) for silver Exchange-Traded Funds (ETFs) experienced significant growth in October 2024, reaching Rs 12,331 crore, which is more than four times higher than the Rs 2,844.76 crore recorded the previous year. This increase can be attributed to a substantial rise in silver sales, both in physical form and through ETFs.
The number of folios in silver ETFs surged by 215%, reaching 4.47 lakh in October 2024, compared to just 1.42 lakh in the previous year. Additionally, net inflows saw a healthy increase of 24% year-on-year, amounting to Rs 643.10 crore in October 2024.
ICRA Analytics has noted that while gold ETFs have been a mainstay in the market for a significant period, the emergence of silver ETFs in 2022 has swiftly captured the attention of investors. This can be attributed to the appeal of silver ETFs being more user-friendly and transparent for retail investors.
The surge in popularity of silver ETFs is reflective of the increasing preference among retail investors, who are attracted to the accessibility and transparency offered by these investment options compared to physical silver. Unlike physical silver, which presents challenges such as storage requirements and additional fees like GST, silver ETFs offer improved liquidity and trading convenience. By being traded on exchanges, investors have the flexibility to easily buy and sell units of silver ETFs.
Return on Silver vs Returns on Gold ETFs
The performance of silver ETFs has clearly surpassed that of gold ETFs in last one year.
Returns (in %) Silver ETFs Gold ETFs
1 Month 7.57% 5.32%
3 Months 16.02% 14.29%
6 Months 20.25% 10.29%
1 Year 32.49% 28.07%
Silver ETFs are suitable for?
Diversification seekers: For individuals seeking to expand their investment portfolio beyond the traditional stocks and bonds, silver ETFs can provide a low correlation to these assets, potentially reducing overall portfolio risk.
Inflation hedges: Investors who are wary of inflation may find reassurance in silver ETFs. Throughout history, precious metals have acted as a safeguard against the diminishing value of fiat currencies.
Growth investors: Given the growing demand for silver in industrial sectors such as solar energy and electronics, growth-focused investors may view silver ETFs as a means to take advantage of this expanding market.