Silver ETFs: A Shining Investment Opportunity Amid Inflation and Instability

Silver ETFs have seen a four-fold growth in AUM, reaching Rs 12,331 crore in October 2024. Launched in 2022, these funds are gaining popularity among retail investors as a hedge against inflation and geopolitical issues. The number of folios and net inflows have also surged significantly.

Over the past year, Silver ETFs have recorded an impressive four-fold increase in Assets Under Management (AUM), escalating from Rs 2,844.76 crore in October last year to Rs 12,331 crore by October 2024. This growth reflects a growing interest among investors seeking a reliable hedge against domestic inflationary pressures and geopolitical instability, according to ICRA Analytics.

ICRA Analytics reveals that Silver ETFs, introduced in 2022, have rapidly gained popularity among retail investors due to their accessibility and transparency. The investor base for these funds has expanded significantly, with the number of folios surging by 215% to 4.47 lakh in October 2024, compared to 1.42 lakh a year before. Additionally, net inflows have increased by 24% year-on-year to Rs 643.10 crore.

Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, notes an increase in the number of silver ETFs available, from 8 in April 2023 to 12 by August 2024. Silver ETFs are favored over physical silver due to benefits such as easier storage, better liquidity, and lower costs, including reduced GST implications. Average returns have also been noteworthy, outperforming gold ETFs across various time frames, thereby establishing silver ETFs as a robust investment option.

(With inputs from agencies.)