Silver ETFs Outshine Gold in Last One Year; Should You Invest in It or Not?
Silver ETFs have been the best performers in the past year, much more impressive compared to their gold ETF peers. According to a report by ICRA Analytics, silver ETFs posted returns of up to 32.49%, while gold ETFs posted returns of only 28.07% within the same period. Such growth calls for questions like, Should one look at white metals at this point?
Fast-Rising Silver ETFs
Silver ETFs seem to be skyrocketing in popularity over the past year, as their AUMs witnessed a huge surge. From Rs. 2,844.76 crore in the previous financial year, silver ETFs have witnessed an AUM growth of over fourfold, standing at Rs. 12,331 crore as of October 2024.
This boost can be attributed to the surge in the demand for silver, both in physical and ETF form. Folios in silver ETFs have increased by 215%, reaching 4.47 lakh in October 2024, compared with 1.42 lakh a year ago. Net inflows into silver ETFs have also grown by 24% year-on-year, touching Rs. 643.10 crore in October 2024.
Increasingly, retail investors are now keen to invest in silver ETFs due to their transparency and accessibility, as opposed to physical silver. Physical silver involves storage concerns and additional costs in terms of GST, whereas silver ETFs are better in terms of liquidity and simplicity of trading. These are available on the stock exchanges and can easily be bought and sold by investors in units.
Performance of Silver Vs. Gold ETFs
Silver ETFs have outperformed gold ETFs in performance across all durations. The reason behind this high performance of silver ETFs is the increased interest from the investor community, making it a more attractive investment opportunity.
Silver ETFs have provided returns of 7.57% in the last month. In contrast, gold ETFs have provided 5.32% in the same duration. The last three months have been marked by higher returns in silver ETFs, which stand at 16.02%, while those of gold ETFs come in at 14.29%. Turning to the last six months, silver ETFs have posted a huge return of 20.25%, while gold ETFs have returned 10.29% within the same period. Over the past year, silver ETFs have returned 32.49%, above the returns recorded by gold ETFs, which have gone up 28.07%.
Best Silver ETF Returns
The best silver ETFs for varied time periods are as follows:
Return in the Past Month:
- Aditya Birla Sun Life Silver ETF: 7.62%
- Axis Silver ETF: 7.6%
- DSP Silver ETF: 7.59%
- HDFC Silver ETF: 7.58%
- ICICI Prudential Silver ETF: 7.61%
Return in Three Months:
- Aditya Birla Sun Life Silver ETF: 16.05%
- Axis Silver ETF: 16.04%
- DSP Silver ETF: 16.04%
- HDFC Silver ETF: 15.97%
- ICICI Prudential Silver ETF: 16.05%
Return in Six Months:
- Aditya Birla Sun Life Silver ETF: 20.03%
- Axis Silver ETF: 21.98%
- DSP Silver ETF: 20.09%
- HDFC Silver ETF: 22.53%
- ICICI Prudential Silver ETF: 19.99%
Return in One Year:
- Aditya Birla Sun Life Silver ETF: 32.61%
- Axis Silver ETF: 31.43%
- DSP Silver ETF: 32.57%
- HDFC Silver ETF: 33%
- ICICI Prudential Silver ETF: 32.57%
The returns indicate a positive trend across different periods, suggesting a strong future for silver ETFs.
A Bright Future for Silver
The demand for silver is expected to remain strong due to its critical role in electronics, renewable energy technologies, and other green initiatives. Geopolitical tensions and inflationary pressures might also continue to make silver an attractive safe haven, driving its price upward.
Interest rate cuts by the US Federal Reserve are anticipated to further support silver prices. Recent adjustments in customs duties and tax structures have added to the appeal of silver investments, giving investors motivation to consider silver ETFs.
Silver is also viewed as an effective portfolio diversifier and a hedge against inflation. These factors combined point to sustained demand for silver, making it an attractive asset for long-term investment.
Should Investors Invest in Silver ETFs?
Silver ETFs offer an attractive opportunity, especially in times of heightened economic uncertainty. They serve as a valuable asset for diversification and protection against inflationary pressures. However, an investor should analyze their financial goals and risk tolerance before investing in silver ETFs.
With strong performance and growing demand, silver appears to be maintaining its momentum, making silver ETFs a worthwhile addition to an investor’s portfolio.
