WHAT ARE GOLD AND SILVER ETFs? HOW CAN AN INVESTOR BUY THEM?
Gold and silver ETFs or exchange-traded funds, are vehicles that help investors buy these precious metals and take exposure to them, without the need to physically buy them or store them. The ETFs are traded on the stock exchange like any other stock and their value reflects the performance of the underlying precious metals. Gold and silver ETFs typically invest in gold/silver bullion, gold/silver futures contracts, and they aim to track the price of the precious metal as closely as possible. Investors who do not have demat accounts to buy a gold ETF or find it cumbersome to trade, can buy a gold or silver fund, which invests in a gold or silver ETF.
WHAT IS THE ADVANTAGE OF BUYING PRECIOUS METALS THROUGH THE MUTUAL FUND ROUTE?
Buying precious metals through the mutual fund route is beneficial as there is no storage cost, worries of purity, making charges or chances of theft. Buying units of the mutual fund scheme gives you exposure to gold or silver as an asset class and helps you track gold or silver prices at a very low cost. Investors can buy either a gold or silver ETF/fund, or get exposure to gold through a multi-asset fund that buys gold and silver as a part of its portfolio.
HOW MANY GOLD AND SILVER ETFs ARE AVAILABLE TO INVESTORS?
There are 20 gold ETFs that manage assets worth Rs 62,124 crore as of May 31, 2025. In the case of silver there are 15 ETFs that manage Rs 15,500 crore.
WHAT HAS BEEN THE RETURN THAT GOLD AND SILVER FUNDS HAVE GIVEN?
Gold has rewarded investors well over the last decade. In rupee terms, over the last one year, gold funds have returned 30.89%, while silver funds have returned 15.18%. Over longer tenures of three years they have returned 22.05% and 18.29%, respectively.HOW MUCH GOLD AND SILVER SHOULD INVESTORS BUY IN PORTFOLIOS?
Gold acts as a portfolio diversifier and acts as a hedge against rising inflation, while silver has industrial usage and is used to make jewellery, coins, photography, electronics and solar panels. Wealth managers believe investors should allocate 10-15% to gold and silver in their portfolios, based on their risk appetite and asset allocation. Investors could stagger their purchases in these precious metals through systematic investment plans (SIPs).
