Upcoming NFO: Nippon India Mutual Fund Filed Draft for Gold Silver Passive FoF

Nippon India Mutual Fund has filed draft papers with the market regulator for the launch of Nippon India Gold Silver Passive FoF, an open-ended fund of fund scheme investing in Nippon India ETF Gold BeES and Nippon India Silver ETF.  

The proposed scheme has been categorised as a commodity-based domestic FoF and will seek long-term capital appreciation through investments linked to gold and silver prices.  

Proposed Portfolio Structure 

The draft document showed that 95% to 100% of the scheme’s assets will be invested in units of Nippon India Silver ETF and Nippon India ETF Gold BeES.  

Up to 5% of the portfolio may be held in money market instruments to manage liquidity requirements and operational needs.  

The benchmark for the scheme has been fixed as Domestic Price of Gold (50%) plus Domestic Price of Silver (50%). According to the filing, the benchmark has been selected in line with the structure of the fund and domestic spot prices of the 2 commodities.  

Investment Strategy and Restrictions 

The scheme will follow a passive investment approach by investing in the 2 underlying exchange traded funds.  

The allocation between gold and silver will be based on an internal model tracking price movements in both metals, while the fund manager may make adjustments depending on broader market conditions.  

The draft papers stated that the scheme will not invest in overseas securities, derivatives, securitised debt, credit default swaps, REITs, InvITs or short selling. The scheme will also not undertake securities lending and borrowing activities.  

Investment Amount and Charges 

The minimum application amount during the New Fund Offer (NFO) and on a continuous basis has been fixed at ₹500, while additional investments can be made from ₹100 onwards. The units will be offered at ₹10 each during the NFO period.  

The scheme will not charge any exit load. The annual recurring expense ratio has been capped at up to 0.90% of daily net assets, excluding statutory levies. Investors will also bear expenses charged under the underlying ETFs. 

Read More: Sectoral and Thematic Mutual Funds See 28% Drop in April Inflows Despite Positive Returns! 

Conclusion  

Nippon India Mutual Fund’s proposed FoF combines investments in gold and silver ETFs under a single scheme structure. The draft papers outline allocation limits, expenses, and investment restrictions. 

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