Silver ETF is the new arena for mutual funds to compete

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There is always a charm in being the first one to achieve something. The first-mover advantage is a tag, which many want and pursue quite actively. 

Currently, there is a race going on between some of the mutual fund houses of the country to become the first one to launch a product, which, only recently got the final approval from the capital markets regulator the Securities and Exchange Board of India (SEBI). 

A new category of product – some may even call it a new asset class as it was not available under mutual funds earlier – has been made available and it is only elementary that fund houses will vie with each other to be the first one to launch a scheme to garner as much investor interest – and money – as possible. 

Exchange traded funds (ETFs) and even fund of funds (FoF) based on silver are now hitting the market and at least half a dozen fund houses are in the fray to launch either a Silver ETF or a Silver Fund of Fund. 

On January 5, ICICI Prudential MF became the first fund house to launch a Silver ETF and is now in the process of launching a fund of fund scheme, which will open on January 13. A fund of fund typically invests in other mutual fund schemes.  

Aditya Birla Sun Life MF, Nippon India MF, DSP MF, HDFC MF and Mirae Asset are some of the other fund houses that have already taken the first step towards launching their respective silver-based schemes. 

The new fund offer (NFO) of Aditya Birla Sun Life MF will open on January 13 and it is claiming to be India’s first fund house to launch a combo of a silver ETF and a Silver Fund of Fund. Incidentally, the NFO of the twin schemes – Silver ETF and Silver FoF – of Nippon India MF will also open of January 13 and close on January 27. 

Mutual fund schemes based on silver as an underlying was a long-standing demand of the fund industry and an earlier attempt by SEBI many years back to give its go-ahead was met with opposition by the erstwhile Forward Markets Commission (FMC), which was formally merged with SEBI in 2015. 

In September last year, the board of the capital markets regulator finally gave its approval to mutual funds to launch Silver ETFs.