Edelweiss Gold and Silver ETF Fund of Fund NFO – Quick Review
Edelweiss MF has launched Gold and Silver ETF Fund of Fund. Edelweiss Gold and Silver ETF Fund NFO would open for subscription on 24th August, 2022. Many investors still believe investing in gold is a good idea, however not interested in silver. This new mutual fund scheme invests in a combination of these two commodities. Should you invest in Edelweiss Gold and Silver ETF Fund of Fund NFO? How is the performance of gold and silver in the last 5 to 10 years?
Edelweiss Gold and Silver ETF FoF – NFO Issue Details
Here are the issue details of the NFO.
|Scheme reopens for continuous purchase/sale||21-Sep-22|
|Minimum Lumpsum||Rs 5,000|
|Minimum SIP||Rs 500 for 12 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||< 1 Year – 1%
After 1 year – Nil
|Risk||Very High Risk|
|Fund Manager||Mr. Bhavesh Jain & Mr. Bharat Lahoti|
Edelweiss Gold and Silver ETF Fund – Investment objective
This is an open-ended fund of funds scheme investing in units of Gold ETF and Silver ETF.
The investment objective of the scheme is to generate returns by investing in units of Gold ETFs and Silver ETFs. However, the performance of the scheme may differ from that of the underlying gold and silver due to tracking error of the underlying exchange traded funds.
There can be no assurance that the investment objective of the scheme will be achieved. The scheme does not guarantee/ indicate any returns.
What is the allocation pattern in this mutual fund scheme?
This fund invests pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|A) Units of Gold and Silver
| A1) Of which Units of Gold
| A2) Of which Units of
|B) Money Market Instruments, cash and cash equivalent and/or units of Liquid scheme||0%||5%||Low|
Edelweiss Gold and Silver ETF FoF – Why to invest?
1) This is a unique mutual fund scheme that invests in a combination of gold and silver.
2) If you believe that gold and silver rates would go up in the future, you can consider such schemes.
Edelweiss Gold and Silver ETF Fund – Negative or Risk Factors
1) This fund invests up to 65% in gold. If you observe historical performance, gold has generated very low returns compared to equity or debt segments.
2) This fund also invests in silver up to 65%. Historically, silver is under performing and generated very thin returns.
3) This fund would invest in debt instruments where there is interest rate risk, reinvestment risk, liquidity risk and default risk.
4) For complete risk factors, one can refer SID / KIM / Prospectus of the mutual fund schemes.
How is the Performance of existing Gold and Silver ETF Fund of Funds?
Currently there are Gold ETFs / mutual funds already existing. However, silver ETF were launched in the last 1-2 years only.
A) Gold ETFs / Mutual funds generated 4.3% to 4.7% annualized returns in last 10 years and 10.8% to 11.3% annualized returns in last 5 years. Here is the list of gold ETFs and mutual funds with their historical performance.
|Scheme Name||3 Yrs||5 Yrs||10 Yrs|
|IDBI Gold ETF||9.5%||11.3%||4.7%|
|Aditya Birla Sun Life Gold ETF||9.5%||11.1%||4.6%|
|Invesco India Gold ETF||9.5%||11.2%||4.6%|
|SBI Gold ETF||9.4%||11.0%||4.5%|
|HDFC Gold ETF||9.2%||10.9%||4.5%|
|Nippon India ETF Gold BeES||9.2%||10.9%||4.5%|
|Kotak Gold ETF Fund||9.4%||11.1%||4.5%|
|ICICI Prudential Gold ETF||9.2%||10.8%||4.4%|
|UTI Gold ETF||8.9%||10.8%||4.4%|
|Quantum Gold Fund||9.2%||10.9%||4.4%|
|Quantum Gold Savings Fund||10.2%||11.1%||4.3%|
|Axis Gold ETF Fund||9.5%||11.2%||4.3%|
B) Silver – Some of the ETFs were launched in the last 1-2 years. Silver as an asset class has generated 1.5% annualized returns in last 10 years and around 8% annualized returns in the last 5 years.
Edelweiss Gold and Silver ETF Fund – Should you invest in this NFO?
Edelweiss Gold and Silver ETF Fund invests in gold and Silver ETFs. While gold as an investment option generated 4.7% annualized returns in the last 10 years, silver on other hand generated minute returns.
I personally like to avoid such funds as of now.
If you still believe that investing in a combination of gold and silver is beneficial and matches your investment style, you can invest in this fund.
Alternatively, one can invest in gold mutual funds from the above list and avoid investing in silver altogether.
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