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?

Also Read: New Mutual Fund Schemes that invests in Artificial intelligence, Metaverse etc.,

Edelweiss Gold and Silver ETF FoF – NFO Issue Details

Here are the issue details of the NFO.

Scheme Opens 24-Aug-22
Scheme Closes 07-Sep-22
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
Entry Load Nil
Exit Load < 1 Year – 1%
After 1 year – Nil
Risk Very High Risk
Benchmark LBMA Prices
Fund Manager Mr. Bhavesh Jain & Mr. Bharat Lahoti
Max TER 1.00%

Edelweiss Gold and Silver ETF FoF SID

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.

Edelweiss Gold and Silver ETF Fund of Fund - NFO Details and Review

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
ETFs
95% 100% Medium
  A1) Of which Units of Gold
ETFs
35% 65% Medium
  A2) Of which Units of
Silver ETFs
35% 65% Medium
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.

Also Read: This midcap fund generated 25% returns in last 1 year

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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Suresh KP

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