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Often at the heart of multiple cultural practices and emotions, investing in precious metals like gold and silver is an age-old practice in India. Historically, these two metals have demonstrated their prowess as empirical choices in the face of uncertain economic cycles. While investors have been exposed to gold ETFs in the past, silver ETFs have slowly but steadily begun to take center stage recently. However, most investors have not yet understood the importance of this metal and its role in an investment portfolio. In addition to diversification, exposure to the metal has the ability to provide an inflation hedge to the portfolio. Since the movement of money tends to have a minimal correlation with the movement of stocks or debt, the portfolio’s ability to accumulate over the long term is not significantly affected, even in the face of downturns. economic headwinds.
To help investors add the brilliance of silver to their portfolio, Axis Mutual Fund has launched Axis Silver ETF (an open-ended system that replicates/follows the national price of silver) and Axis Silver Fund of Fund (a open-ended funds of funds investing in units of the Axis Silver ETF). YourStory spoke with Ashwin Patni, Head Products and Alternatives, Axis AMC, to help investors understand the benefits of silver exposure and the unique value propositions of newly launched funds. Here are the main takeaways from the conversation.
A potential hedge against inflation and economic downturn
At the start of 2022, the market saw silver being used as an inflation hedge. Explaining what differentiates physical assets from financial assets and why they should ideally be the preferred hedge against long-term inflation, Ashwin said: “Historically, durable assets like land or cash have a lower correlation with economic downturn.”
“Financial assets tend to be affected and hit harder by economic turmoil, and impacted by issues such as inflation. Physical assets are known to be more resilient to these issues and some of the market volatility “.
Why silver should be a preferred asset class for young or new investors
Ashwin contextualized how precious metals like gold or silver have historically demonstrated their ability as resilient investment avenues and should therefore be an essential component of an investor’s portfolio. “A young or new investor tends to think about the next 10 to 40 years when building their portfolio. It is almost certain that on a 40 year time scale you will have multiple shocks which could be macroeconomic, inflationary or financial in nature. So when you build your portfolio, you need to have a very healthy balance between financial and physical assets. Historically, people who held gold or silver in their wallets have witnessed their resilience in times of economic shocks,” he said.
What makes silver an attractive investment avenue
Silver is much more than its popular use in jewelry. In fact, it is a key component for many industrial applications. The high demand for this metal also results directly from the fact that it is one of the best conductors of electrical and thermal energy. Furthermore, the widespread use of silver in sectors such as renewable energy, electronics and jewelry, in addition to investments, has created a unique opportunity for investors to take advantage. One of the main factors that make silver’s economic outlook promising is the expected rise in its demand which will exceed supply.
“While silver is obviously an important part of jewelry or investments, many industrial use cases have also been created over the years. Allocation to a certain asset class like silver with a vision long-term is important,” Ashwin said, speaking of the diverse demand for silver and its resilience to demand and supply impacts from any segment.
Benefits of Investing in Silver Through an ETF or Fund of Funds
Ashwin talked about two key benefits of investing in silver through an ETF, namely convenience and security. “When it comes to assets like money, storage, quality control, finding a reliable counterparty to trade with, and security are some of the main concerns,” he said. “An ETF can potentially act as a solution to these problems. Daily NAV (Net Asset Value) makes it easy to buy and sell and investors don’t have to worry about quality and storage. Many of these things are automatically taken care of by the framework itself. And that’s the beauty of this product,” he added.
When an investor wants to buy a Silver ETF, there is an entity (registered on the NSE) in the background that meticulously tracks the latest market price. NSE allows an “Authorized Participant or Member”, usually large corporations/corporations, to manage the buying and selling of silver to generate ETFs. For a retail investor to invest in Silver ETF, all they need to do is open a Demat/trading account online by submitting PAN, Aadhar, ID proof and residential proof. Once this has been verified, he can buy a Silver ETF of his choice and invest in it.
Investors who do not have a Demat account can expose themselves by investing in Silver Fund of Fund. Investors new to the market with limited knowledge of the investment landscape and looking for long-term, diversified investment solutions with relatively less exposure to risk should consider funds of funds.
Invest in silver with Axis Mutual Fund
Keeping investor convenience in mind, Axis Mutual Fund has announced two silver investment programs. “We launched the Axis Silver ETF – an open-end system that replicates or follows the national price of silver and Axis Silver Fund of Fund, an open-end fund of funds system investing in the Axis Silver ETF for We aim to seamlessly integrate available market opportunities with an investment strategy that allows investors to gain distinctive exposure to the metal,” Ashwin explained.
Other key attributes include:
1. The funds will invest in standard 30kg physical silver bars with a fineness of 999 parts per 1000
2. Buying/selling silver from reputable institutions and bullion dealers to ensure minimum transaction costs and quality
3. Hassle-Free Ownership in Demat*/MF Units**
4. Money storage, transport and insurance concerns covered by Axis AMC
5. Liquidity of exchange – Investors can buy and sell shares of ETFs on NSE at their convenience
For the Axis Silver ETF, the minimum request amount would be INR 500 per request and in multiples of INR 1/- thereafter. For Axis Silver Fund of Fund, the minimum request amount is INR 500 and in multiples of Re 1/- per request in the ETF & INR 5,000 and in multiples of INR 1/- thereafter in the Fund of Fund. Both funds will be referenced against the AM daily spot fixing price of LBMA Silver.
“The beauty of these mutual funds is that you can accommodate smaller investors and larger investors in the same product in the same consistent way and everyone gets the same experience,” he said. declared.
*Axis Sliver ETF units will only be available in dematerialized form
**Axis Silver Fund of Fund will invest the majority of its assets in Axis Silver ETF and investors will be allocated units of the MF which can be freely traded directly with the AMC subject to exit fees, levies and applicable taxes , if applicable. The units of Axis Silver Fund of Fund will not be listed on exchange platforms.
Sources: AMFI, MF Research Axis
Product labeling and risk indicator:
To note: Investors should consult their financial advisers if in doubt as to whether the product is suitable for them.
The labeling of the product assigned when offering the new fund is based on an internal assessment of the characteristics of the scheme or model portfolio and it may vary after the NFO when the actual investments are made.
Investors will bear the recurring expenses of the scheme in addition to the expenses of other schemes in which the fund of funds scheme invests
About Axis AMC: Axis AMC is one of the fastest growing asset managers in India, offering a comprehensive bouquet of asset management products across mutual funds, portfolio management services and alternative investments.
Disclaimer: This press release represents the views of Axis Asset Management Co. Ltd. and should not be relied upon as the basis of any investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited, nor Axis Asset Management Company Limited, its directors or associates shall be liable for any damages, including loss of income or loss of profits which may arise from reliance on the information contained in the present document. Investors are urged to consult their financial, tax and other advisers before making any investment decision. Statutory details: Axis Mutual Fund was established as a trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability limited to Rs. 1 Lakh). Curator: Mutual Fund Trustee Axis Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the CMA). Risk factors: Axis Bank Limited is not responsible for any loss or loss of profit resulting from the operation of the program. No representations or warranties are made as to the accuracy, completeness or fairness of the information and opinions contained herein. CMA reserves the right to make changes and alterations to this statement as needed from time to time.
The above information is included for general information only and does not constitute legal or tax advice. Given the individual nature of the tax consequences, each investor is advised to consult their own tax adviser regarding the specific tax implications arising from their participation in the Scheme. The tax advantages for the mutual fund and the unitholder are in accordance with applicable tax laws, as certified by the mutual fund consultant. Any action taken by you based on the information contained herein is your sole responsibility. Axis Mutual Fund will in no way be liable for the consequences of such action on your part. The information contained herein is not intended to constitute an offer or solicitation for the purchase and sale of any Axis Mutual Fund scheme.
Past performance may or may not be sustained in the future.
Stock(s) / Issuer(s) / Top stocks mentioned above are indicative only and should not be construed as a recommendation.
Investments in mutual funds are subject to market risk, read all plan documents carefully.
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