Definition
Silver ETF
A silver ETF is an exchange-traded fund that holds physical silver and tracks domestic silver prices, allowing investors to take silver exposure in dematerialised, exchange-traded form.
SEBI permitted silver ETFs in India in 2021, and several AMCs launched funds holding standardised physical silver in vaults. Like gold ETFs, they let investors gain commodity exposure without dealing with physical purity, storage and liquidity problems, trading on the NSE/BSE close to the domestic silver price.
Silver prices are more volatile than gold because of silver's large industrial demand component, so silver ETFs carry higher price swings. Valuation and creation/redemption follow SEBI norms benchmarked to domestic spot silver, and silver fund of funds provide access for investors without a demat account.
Related terms
- ETF Creation/RedemptionCreation and redemption is the primary-market mechanism by which authorised participants exchange a basket of underlying securities (or cash) for new ETF units, or hand back units for the basket, keeping the ETF price aligned with its NAV.
- Fund of Funds ETFA fund of funds (FoF) is a mutual fund scheme that invests in units of other funds or ETFs rather than directly in securities, often used in India to give domestic investors access to ETFs without a demat account.
- Commodity ETFA commodity ETF provides exposure to physical commodities or commodity prices, such as gold and silver in India, through an exchange-traded structure rather than direct purchase of the physical asset.
- Gold ETFA Gold ETF is an exchange-traded fund that tracks the price of physical gold, letting investors buy and sell gold exposure on the stock exchange in demat form.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.