Gold and Silver Exchange-Traded Funds (ETFs) offered an affordable way to diversify investment portfolios, attracting a significant amount of capital from Indian investors. Gold ETFs were particularly preferred for their safe-haven qualities during periods of economic instability, while Silver ETFs benefited from strong demand in industrial sectors. The combination of both assets proved to be profitable and has gained popularity among investors looking to access precious metals. The introduction of the Edelweiss Gold and Silver ETF Fund of Fund marked the first of its kind in India, allowing investors to allocate funds to both gold and silver metals in a single scheme.
The Edelweiss Gold and Silver ETF Fund of Fund Regular Growth was launched in August 2022 and has assets under management (AUM) amounting to Rs 136 crores as of September 30, 2024. The fund has an expense ratio of 0.3%. The Edelweiss Gold and Silver ETF FoF Direct – Growth has shown a return of 31.15% in the last year, with an average annual return of 25.31% since its inception.
This scheme aims to generate returns by investing in units of Gold ETFs and Silver ETFs, but the performance may vary from that of the underlying gold and silver due to tracking errors of the exchange traded funds. The minimum investment required for the Edelweiss Gold and Silver ETF Fund of Fund Regular Growth is Rs 100, with a minimum SIP of Rs 100.
A Fund of Funds (FoF) is a collective investment scheme that pools funds to primarily invest in mutual and hedge funds instead of directly investing in securities. The scheme will initially allocate funds equally between metals and adjust the percentage periodically based on performance.
Funds similar to Edelweiss Gold and Silver ETF Fund of Fund include Quantum Gold Savings Fund Regular Growth Option, Aditya Birla Sun Life Silver ETF Fund of Fund Regular Growth, HDFC Silver ETF Fund of Fund Regular Growth, Edelweiss Gold and Silver ETF Fund of Fund Regular Growth, and Motilal Oswal Gold and Silver ETFs Fund of Funds Regular Growth.
Fund name 1-Year Return
Edelweiss Gold and Silver ETF FoF 32.1%
Axis Gold Fund 28.63%
Invesco India Gold ETF FoF 28.59%%
SBI Gold Fund 28.8%
HDFC Gold Fund 28.51%
Nippon India Gold Savings Fund 28.52%
Taxation boost to Gold and Silver ETF FoFs
The attractiveness of Gold and Silver ETFs for investors looking to diversify their portfolios has been increased by the changes made in Budget 2024. Starting July 23, 2024, a revised tax structure will be in place for investments in these ETFs. Any gains from selling these ETFs held for longer than 12 months will be subject to a 12.5% capital gains tax, while gains from shorter holding periods will be taxed according to the slab rate.