Leading mutual funds have queued up before market regulator SEBI for launching silver Exchange Traded Fund weeks after the market regulator cleared regulations which paved the way for retail investments in the white metal.
Aditya Birla Sun Life Mutual Fund, Nippon India and Mirae Asset filed scheme information document (SID) with market regulator SEBI for launching Silver Exchange Traded Fund on Friday.
While Birla MF and Mirae Asset will launch silver ETF, Nippon MF will hit the market with both an ETF and a Fund of Fund. The ETF will invest in physical silver of SEBI prescribed quality and standard.
Debt instruments too
A small portion of the net assets will be invested in debt and money market instruments to meet the liquidity requirements of the scheme. It will also invest in instruments notified by SEBI with silver as underlying asset, said Birla MF in its filing with SEBI.
It will also invest up to 10 per cent of asset in exchange traded commodity derivatives having silver as the underlying by Silver ETFs. However, the above limit of 10 per cent shall not be applicable to Silver ETFs where the intention is to take physical delivery of silver and not to roll over its position to next contract cycle, it added.
Birla MF intends to keep the physical silver of standard 30 kg bars with 99.9 per cent purity confirming to London Bullion Market Association Good Delivery Standards.
The investment objective of silver ETF and FoF is to generate returns that are in line with the performance of physical silver in domestic prices.
During the new fund offer, SEBI allows mutual funds to levy a transaction charge of ₹150 for ETF investment of above ₹10,000 from first time investors and ₹100 for others as commission to distributors. For investments below ₹10,000 there are no additional charges.
Market regulator SEBI last week laid down operating norms for silver ETFs. According to SEBI guidelines, fund houses have to adhere to the mutual fund regulations when it comes to expense ratio of the scheme, computation and disclosure of net asset value. Expense ratio for silver funds cannot exceed one per cent of the scheme AUM.
Navi’s Blockchain fund
Incidentally, Sachin Bansal-backed Navi Mutual Fund has also moved SEBI to launch Blockchain Index Fund of Fund and World Index FoF.
The first of its kind, Navi Blockchain Index FoF will invest in constituents of the Indxx Blockchain Index which tracks the performance of companies that are using or developing products based on blockchain technology.
The Navi World Index FoF will track performance of the MSCI World index which is a broad global equity index that represents large and mid-cap equity performance across 23 developed markets countries.