Edelweiss to launch India's first gold and silver fund. NFO opened on 24 August till 7 September

NFO by Edelweiss to offer equal exposure to gold and silver

Edelweiss asset management

Asset management company Edelweiss AMC has launched India's first fund to invest in both precious metals- gold and silver. The NFO opened on 24th August and will close on 07th September. The mutual fund will be a good inflation hedge and provide exposure to the two main precious metals. The fund managers are Bhavesh Jain and Bharat Lahoti.

India's first gold ETF, Nippon India ETF Gold BeES, was launched in March 2007. The first silver ETF was launched in January this year. This is India's first gold and silver fund with equal exposure to gold and silver. Before Edelweiss, Motilal Oswal MF and ICICI Prudential MF have filed applications to introduce gold and silver ETFs. But Edelweiss AMC has taken the lead in launching India's first gold and silver fund. 

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Edelweiss gold and silver ETF

Edelweiss AMC does not have gold and silver ETFs. Therefore, the fund will buy units of other AMCs to maintain equal exposure to both precious metals. As per the MD and CEO, Radhika Gupta, there are several gold and silver ETF products in the markets, but there is no single proposition to maintain equal exposure in both precious metals. Usually, equities have low co-relation with precious metals, and therefore, in times of high inflation or recession, this ETF can be a good choice for investors.

As per the note provided by the scheme, gold outperforms during recessions, and silver outperforms gold in precious metals bull market rallies. In the previous recessions of 2008, 2011 and 2016, gold gave returns of 26.1%, 31.7% and 11.3%, respectively. The demand for silver is increasing as well with the higher penetration of products like electric cars, solar panels and smartphones, which require silver. The returns of silver in the last ten years have been low.

As per the CEO, metals have an inverse correlation with the dollar. As the US economy is weakening, there is a chance that the dollar may go down. This will mean that precious metals should rally.

Related: Gold trends over the last 20 years: How to become a smart gold buyer

What should you do?

Gold has a history of being an inflation hedge. With inflation not coming down, gold can give good returns. Silver has more industrial applications, and the price of silver is determined based on industrial demand as well. Therefore, silver can be more volatile when the economy is going down. If you are looking for an inflation hedge and high returns in precious bull market rallies, this fund with equal exposure to the two precious metals looks like a nice bet.

Also read about the Performance of gold in 2022: Should you buy, sell or hold your gold holdings


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