HDFC Mutual Fund launched its New Fund Offer, HDFC Silver ETF FoF on 07th Oct 2022. Know all about the NFO. Investors can invest in this fund for as low as 100 rupees.
HDFC Mutual Fund launched its NFO(new fund offer)HDFC Silver ETF FoF on 07th October, and the NFO will close on 21st of this month. This fund of fund scheme will invest in HDFC Silver ETF, which was earlier launched by HDFC AMC.
This fund allows investors to invest as low as 100 rupees. HDFC Silver ETF FoF will invest more than 95% of its asset in the units of HDFC Silver ETF and the rest amount will be invested in debt and money market instruments. This fund has the only option of growth, dividend payout option is not available. An investor can invest through either direct plans or regular plans.
This fund has an exit load of 2% if redeemed within six months from the date of allotment. And 1% exit load will be charged if redeemed before one year of allotment. There will be no exit load if redeemed after one year from the date of allotment.
Why invest in silver now?
Silver is widely used as an industrial commodity. It is heavily used in portable devices in industrial equipment. The demand for silver is likely to grow on account of higher adaption in the new age and green technologies like solar panels, electronic devices, electric vehicles, new age pharmaceutical products, water purification, etc.
Silver is also used as a precious metal in our households for making ornaments, utensils, etc.
Silver can be used as an investment opportunity, due to its high demand in different sectors. It can be used as hedging against currency depreciation and for diversifying your portfolio, during uncertainty arising out of war-like situations.
Major uses of Silver
1- Silver is a precious metal that is used in making jewellery, and silverware.
2- As an industrial commodity, it has large industrial uses- from electrical switches to chemical to solar-producing catalysts.
3- Considered a precious metal in most parts of the country - bought especially in Dhanteras, Akshaya Tritiya, etc.
4- It also serves as one of the best investment tools.
Risk v/s return expectations
As per the Bloomberg data as of September 30, 2022, silver has generated an average rolling return of 11%, 11% & 13% in 1 year, 3 years, and 5 years respectively. While Nifty generated a higher average rolling return of 15%, 15%, and 16% in the same period. But silver has generated much higher returns as compared to debt instruments. Where the average rolling return in debt instruments is 7%, 8%, and 8% respectively in the same period. Gold as a commodity generated a little higher return than silver.
But it is observed that silver tends to be more volatile than gold. Whereas silver has a standard deviation of 11%, 15%, and 27% in 1 year, 3 years, and 5 years of time frames as against gold of 8%, 9%, and 15% respectively.
Fund Details
The investment objective of the scheme is to seek capital appreciation in long term by investing in units of HDFC Silver ETF.
This is an open-ended Fund of Fund scheme investing in units of HDFC Silver ETF. While the benchmark of the scheme is the domestic price of physical silver (based on LBMA silver daily spot fixing price). This scheme will be managed by Mr. Kishan Kumar Daga. The scheme offers a regular plan and a direct plan with a growth option only.
Conclusion
Investors looking for an investment horizon of 5 years or more can invest in this fund, and a higher level of volatility could be seen in the portfolio.
Disclaimer - Please consult your final advisor whether this fund is suitable for you or not.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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