Invesco launches India Silver ETF and Silver ETF Fund of Fund

Invesco Mutual Fund on Tuesday, 27 October, announced the launch of Invesco India Silver ETF and Invesco India Silver ETF Fund of Fund, adding two new routes for investors who want exposure to silver without buying and storing the metal. The announcement came in the BusinessLine live market blog at 12.05 pm on Tuesday.

Invesco India Silver ETF is an open-ended scheme that replicates and tracks the price of silver. Invesco India Silver ETF Fund of Fund is an open-ended scheme that invests in units of Invesco India Silver ETF. The fund house said the two schemes offer investors a convenient and efficient way to gain exposure to silver as an asset class.

The structure gives investors a choice of route. An exchange traded fund trades on a stock exchange, so its units are bought and sold during market hours at market prices. A fund of fund, by contrast, invests in the units of that scheme, so an investor can come in through the mutual fund route and hold units of the fund of fund instead of holding the exchange traded units directly.

How the new silver ETF works

A silver ETF holds silver or silver-linked assets and aims to mirror the movement in the metal price, after costs. The price of each unit therefore moves with silver, rather than with the shares of a mining or metals company. That distinction matters for investors who want the metal itself as the driver of returns, not a company balance sheet.

The fund of fund version suits investors who prefer to transact through a mutual fund account. They buy units of the fund of fund, and that scheme in turn holds units of the silver ETF. The return still follows silver, but the investor deals with one mutual fund holding instead of an exchange traded one. Costs and tax treatment can differ between the two routes, so the scheme documents are the place to check the exact terms.

Silver has drawn attention this year as precious metal prices stayed high. In the BusinessLine morning report for 27 October, silver stood at Rs 1,95,846, up Rs 127 from the level shown in the same report. Gold stood at Rs 1,43,073 in the same report. Those levels show why a silver product can find buyers: the metal itself has moved enough to matter in a portfolio, and a fund route avoids the storage, purity and resale questions that come with physical silver.

Silver ETF buyers, mutual funds and the silver price

Precious metals often move for reasons that differ from shares. Interest rate expectations, dollar strength, industrial demand and safe-haven buying all play a part. Silver has a further driver that gold does not share to the same extent: industrial use in electronics and solar equipment, which ties part of its demand to factory orders and energy investment.

That mix can make silver more volatile than gold over short periods. A fund route does not remove that volatility. It removes the practical problems of holding metal, such as storage and insurance, but the unit price still rises and falls with silver. Investors who use the new schemes therefore take on silver price risk, even though they do not hold bars or coins.

Mutual funds in India already offer gold exchange traded funds and gold fund of funds on a similar pattern, so the silver pair follows a familiar template. The ETF gives market-hour access for investors who trade on an exchange, while the fund of fund gives mutual fund access for investors who do not. The launch adds silver to that shelf, at a time when the morning report put the silver price at Rs 1,95,846.

No offer dates, expense ratios or minimum investment amounts were given in the live blog announcement on Tuesday. Investors who want those details will need the scheme information documents, which set out the terms for each scheme. What the announcement did confirm is the pair itself: one scheme tracking the price of silver, and a fund of fund investing in units of that scheme, both launched on 27 October by Invesco Mutual Fund.