Silver ETFs to garner upbeat demand amid geopolitical uncertainty and inflationary pressure

Retail investors amid home inflationary pressures arsenic good arsenic heightened geopolitical uncertainty are betting large connected Silver ETFs, saya recognition standing agency's ICRA Analytics merchandise today. The full assets nether absorption (AUM) grew implicit 4-fold successful the past 1 twelvemonth to Rs 12,331 crore successful October 2024.

And the inclination whitethorn persists added the study successful the wake of home inflationary pressures and geopolitical instability with the instument witnessing upbeat request going down.

"Silver income witnessed a crisp spike up of Dhanteras this twelvemonth and investors were not conscionable buying it successful carnal signifier but were besides investing successful ETFs (Exchange Traded Funds).  While golden ETFs person been successful the marketplace for rather immoderate clip now, Silver ETFs, which were launched arsenic precocious arsenic 2022, has managed to garner attraction of the investors wrong a reasonably abbreviated play of clip arsenic it is much accessible and transparent for retail investors," said ICRA Analytics.

Interestingly, full fig of folios nether Silver ETFs accrued by astir 215 per cent to interaction 4.47 lakh successful October 2024, up from 1.42 lakh aforesaid play past year. Net inflows grew by 24 per cent astatine Rs 643.10 crore successful October 2024, arsenic against Rs 518.02 crore past year. 

According to Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, fig of Silver ETFs, which stood astatine 8 successful April 2023, has accrued to 12 successful August 2024. If home inflationary pressures and geopolitical instability proceed to persist, past metallic whitethorn proceed to witnesser upbeat demand.The marketplace whitethorn spot the motorboat of much Silver ETFs successful the coming months arsenic its relation successful capitalist portfolio diversification, concern and absorption becomes much crucial.

“Silver ETFs managed to garner attraction of the investors wrong a abbreviated play of time.It is being progressively preferred implicit carnal signifier arsenic investing successful carnal metallic is challenging owed to retention related issues. Moreover, buying of carnal metallic whitethorn incur GST costs which unregistered dealers whitethorn person to wage retired of pocket.Investing successful metallic ETFs is comparatively casual compared to that of accepted methods of concern successful carnal metallic and they person amended liquidity compared to that of the carnal options arsenic they are listed connected the speech thereby allowing investors to bargain and merchantability units easily. Lastly, terms ratio of Silver ETFs is amended compared to accepted carnal options,” Kumar said.

The mean returns for a 1-month, 3-months, 6-monthsand 1-year play was successful the scope of 7.57 per cent, 16.02 per cent, 20.25 per cent and 32.49 per cent respectively. This is successful opposition to an mean instrumentality of 5.32 per cent, 14.29 per cent, 1029 per cent and 28.07 per cent generated by Gold ETFs implicit 1-month, 3-months, 6-months and 1-year duration respectively.

“Silver prices are expected to stay charismatic arsenic the anticipation is that the U.S. Federal Reserve volition proceed to chopped involvement rates successful the coming months giving a boost to metallic prices.Besides, geopolitical tensions whitethorn punctual hazard averse investors to put successful safe-haven assets similar silver.Demand of metallic is expected to stay upbeat owed to its usage successful electronics and greenish technologies. Moreover, investors often similar concern successful metallic for portfolio diversification and it is often seen arsenic a hedge against inflation. This apart, chopped successful customs work and alteration successful taxation operation has made metallic concern much attractive,” Kumar added.