Edelweiss Mutual Fund has recently introduced a new investment avenue with the launch of the Edelweiss Silver ETF on November 16, 2023. This open-ended scheme, falling under the category of Other Scheme – Other ETFs, aims to generate returns aligned with the performance of physical silver in domestic markets, subject to a permissible tracking error. It is crucial to note that while the scheme endeavours to meet this investment objective, there is no guarantee or assurance of returns.
Investment Objective and Strategy
The scheme’s investment strategy involves allocating between 95% and 100% of its corpus in silver and silver-related instruments. Additionally, a portion ranging from 0% to 5% will be invested in debt and money market instruments to ensure liquidity and meet expense requirements. The inclusion of exchange-traded commodity derivatives (ETCDs) with silver as the underlying asset provides flexibility in optimizing returns, especially in situations where investing in physical silver may not be feasible or advantageous.
Under normal circumstances, the asset allocation is expected to be divided as follows: a minimum of 95% to a maximum of 100% in silver and silver-related instruments, presenting a moderate to high-risk profile. The remaining 0% to 5% will be allocated to debt and money market instruments, presenting a low to moderate-risk profile. This diversified approach, incorporating both precious metals and debt instruments, aims to strike a balance between potential returns and risk management.
New Fund Offer (NFO) Details
Investors considering participation in the Edelweiss Silver ETF’s New Fund Offer (NFO) should take note of the subscription details. The NFO period commenced on November 16, 2023, and will conclude on November 20, 2023. The scheme is set to re-open for continuous sale and repurchase by November 24, 2023. During the NFO period, the minimum subscription amount is Rs. 5,000, with subsequent multiples of Re. 1. The units will have a face value of Rs. 10 each and will be issued at a premium, if any, approximately equal to the difference between face value and allotment price. Each unit is approximately equivalent to 1 gram of silver.
Edelweiss Mutual Fund aims to collect a minimum subscription amount of Rs. 5 crore during the NFO period, with no upper limit on the total corpus collected under the scheme. This flexibility provides investors with the opportunity to participate based on their investment preferences and objectives.
In terms of expenses, the New Fund Offer (NFO) expenses, including sales, distribution, marketing, advertising, and registrar-related expenditures, will be borne by the Asset Management Company (AMC). On an ongoing basis, the Annual Scheme Recurring Expenses, capped at 1.00% under Regulation 52 (6), encompass components such as Investment Management and Advisory Fee, Trustee fees, Audit fees, Custodian fees, RTA Fees, and marketing and selling costs. Additionally, there is a provision for additional expenses not exceeding 0.30% of daily net assets to enhance the geographical reach of the fund.
Investors should also be mindful of the tracking error, which may arise due to various factors such as fund expenditures, cash holdings, disinvestments, execution of large buy/sell orders, transaction costs, and realization of unit holder’s funds. The fund manager, Mr. Ashish Sood, aims to keep the tracking error as low as possible. The disclosure of the tracking error, not exceeding 2%, will be made daily on the Edelweiss Mutual Fund website and the website of AMFI.
The scheme, managed by Ashish Sood, a 29-year-old CFA Charter holder with a robust educational background in finance, is part of Edelweiss Mutual Fund’s portfolio. Sood’s experience includes working in the finance team with Bharti Airtel and later contributing to Citibank Wealth Management business, where he played a key role in designing and monitoring client portfolios. Other funds managed by Ashish Sood include:
- Edelweiss Multi Asset Allocation Fund (with a focus on the commodity portion)
- Edelweiss Gold ETF
The Edelweiss Silver ETF faces competition from established silver ETFs such as Nippon India Silver ETF, ICICI Pru Silver ETF, and ICICI Pru Silver ETF FoF. While all these ETFs share the common objective of tracking the performance of physical silver, they differ in terms of net assets, returns, risk profiles, expense ratios, and fund age
|Name||Nippon Ind Silver ETF||ICICI Pru Silver ETF||ICICI Pru Silver ETF FoF|
|Category||Commodities: Silver||Commodities: Silver||Commodities: Silver|
|Net Asset (Rs crore)||1,181||883||435|
|Return Since Launch (%)||9.24%||7.09%||7.52%|
|Riskometer||Very High||Very High||Very High|
|Expense Ratio (%)||0.51%||0.40%||0.64%|
|Fund Age||1Y 9M||1Y 9M||1Y 9M|
|1 Day Returns||4.81%||4.82%||3.12%|
|1 Week Returns||3.90%||3.91%||2.37%|
|1 Month Returns||4.50%||4.52%||2.87%|
|3 Months Returns||3.39%||3.42%||2.37%|
|6 Months Returns||0.05%||0.11%||-1.07%|
|1 Year Returns||13.04%||12.13%||14.24%|
Investors should carefully assess their financial goals and risk tolerance before considering participation in this scheme. The scheme’s features, along with the proven expertise of the fund manager, position it as a compelling choice for those looking to diversify their investment portfolio in the dynamic landscape of commodities.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.