SEBI introduces Silver Exchange Traded Funds in India

The market regulator Securities and Exchange Board of India (SEBI) allowed the launch of the Silver Exchange Traded Funds in India.

“The Board approved amendment to SEBI (Mutual Funds) Regulations, 1996 to enable the introduction of Silver Exchange Traded Funds with certain safeguards in line with the existing regulatory mechanism for Gold ETFs,” the press release read.

The launch of ETFs tracking prices of silver and crude oil has been a long-standing demand of investors and the mutual fund industry. Silver has been an integral part of investors’ commodity portfolios globally.

At present, Indian mutual funds are allowed to launch ETFs tracking only one commodity - gold. Gold ETFs together manage assets worth Rs 16,349 crore as of August 31, 2021, as per data released by the Association of Mutual Funds in India. This is in addition to the money invested in sovereign gold bonds that track gold prices and are issued by the Reserve Bank of India on behalf of the Government of India. Precious metals, especially gold and silver, are an important asset class for many Indians.

When compared to gold, silver has higher volatility. For the gold ETFs they administer in India, mutual funds must purchase actual gold. The regulator is expected to stick to its policy of requiring fund houses to own physical silver bars in order to participate in silver ETFs

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