Kotak Silver ETF is an open-ended exchange-traded fund introduced by Kotak Mahindra Mutual Fund on December 9, 2022. The primary objective of this scheme is to generate returns that align with the performance of physical silver in domestic markets, subject to tracking errors. The fund invests in physical silver of 99.9% purity and may also participate in silver-related instruments, including Exchange Traded Commodity Derivatives (ETCDs) with silver as the underlying asset.
Fund Details:
- Fund Managers: Mr. Jeetu Valechha Sonar and Mr. Abhishek Bisen have been managing the fund since its inception.
- Assets Under Management (AUM): As of December 31, 2024, the fund’s AUM stood at ₹741 crore.
- Expense Ratio: The total expense ratio for the regular plan is 0.45%.
- Benchmark: The fund is benchmarked against the Domestic Price of Silver, based on the LBMA Silver daily spot fixing price.
Performance Overview (as of December 31, 2024):
- Since Inception: The fund has delivered a Compound Annual Growth Rate (CAGR) of 13.38%, with an investment of ₹10,000 growing to ₹12,966.03.
- 1-Year Return: The fund achieved a CAGR of 16.62%, with ₹10,000 growing to ₹11,662.03.
- 6-Month Return: The fund experienced a slight decline, with a CAGR of -1.07%, resulting in ₹10,000 decreasing to ₹9,892.89.
Portfolio Composition (as of December 31, 2024):
- Silver: 97.32%
- Net Current Assets: 2.68%
Investment Details:
- Minimum Investment: Through the exchange, investors can purchase a minimum of 1 unit. Directly through the Asset Management Company (AMC), the minimum is 30,000 units.
- Ideal Investment Horizon: 5 years and above.
- Load Structure: There are no entry or exit loads applicable to this fund.
Tax Implications:
- Short-Term Capital Gains (STCG): If units are redeemed within 3 years of investment, the gains are added to the investor’s income and taxed as per the applicable slab rate.
- Long-Term Capital Gains (LTCG): For units redeemed after 3 years, gains are taxed at 20% with indexation benefits, which adjust the purchase price for inflation, potentially reducing taxable income.
- Dividend Distribution Tax: Dividend income from this fund is added to the investor’s income and taxed according to their respective tax slabs. For dividend income exceeding ₹5,000 in a financial year, the fund house deducts a TDS of 10% on such income.
Risk Consideration:
Investors should be aware that the value of investments in the Kotak Silver ETF is subject to market risks, including fluctuations in silver prices. It’s advisable to consult with financial advisors to determine if this product aligns with individual risk tolerance and investment objectives.
Key Features:
(1) Investment Objective:
To track the price of physical silver in India, minimizing tracking errors.
(2) Asset Composition:
- Primarily invests in physical silver with 99.9% purity.
- May also invest in silver-related derivatives like Exchange Traded Commodity Derivatives (ETCDs).
(3) Structure:
It is an open-ended scheme, which means investors can buy and sell units at market prices throughout trading hours.
(4) Target Audience:
Suitable for investors seeking exposure to silver as a commodity and aiming to diversify their portfolios.
(5) Benchmark:
The fund tracks the domestic price of silver based on the London Bullion Market Association (LBMA) Silver daily spot price.
Kotak Silver ETF Returns
Here is a table summarizing the returns of the Kotak Silver ETF as of the latest available data:
| Time Period | Returns (CAGR) | Growth of ₹10,000 |
| 1 Year | 22.32% | ₹12,232 |
| Since Inception | 12.29% | ₹11,229 |
Key Notes:
- CAGR (Compound Annual Growth Rate): Indicates the annualized growth rate of the investment over the specified period.
- Growth of ₹10,000: Shows the hypothetical growth of an initial investment of ₹10,000 over the respective period.
Disclaimer:
- These returns are indicative and subject to change based on market conditions.
- Past performance is not a guarantee of future returns.
- Always consider consulting a financial advisor before investment decisions.
Kotak Silver ETF Holdings
As of the most recent data, the Kotak Silver ETF primarily invests in physical silver, and its portfolio composition is heavily focused on this asset. Here are the top holdings:
(1) Silver (99.9% purity):
The ETF’s main holding is in physical silver, which makes up a large portion of its assets, typically around 97-98% of the total portfolio. This is the primary investment of the fund, tracking the domestic price of silver.
(2) Cash & Net Current Assets:
A small portion of the fund, around 2-3%, is held in cash and other short-term assets for liquidity purposes and to handle daily transactions.
Portfolio Breakdown:
- Silver: ~97-98%
- Net Current Assets: ~2-3%
Since the ETF focuses almost entirely on physical silver, it doesn’t have a diversified portfolio of stocks or bonds. The performance is directly correlated with the price movements of silver.
Kotak Silver ETF Review
The Kotak Silver ETF is an exchange-traded fund that primarily invests in physical silver. It aims to provide investors with returns that closely correspond to the performance of silver in the domestic market, minus any tracking errors. Here’s a comprehensive review of the fund:
Pros:
(1) Exposure to Silver:
- The Kotak Silver ETF offers an easy way for investors to gain exposure to silver, which is traditionally considered a safe-haven investment, much like gold. It is an efficient alternative for investors who do not want to buy and store physical silver.
(2) Liquidity:
- Being an ETF, it can be traded on stock exchanges, making it more liquid compared to owning physical silver. Investors can buy and sell the ETF during market hours.
(3) Transparency:
- The ETF is passively managed and aims to track the price of silver in the domestic market. The fund discloses its holdings regularly, providing transparency to investors.
(4) No Storage Hassles:
- Unlike investing in physical silver, which requires safe storage and insurance, the Kotak Silver ETF eliminates those concerns. The silver is stored safely by the fund.
(5) Low Cost:
- ETFs generally have lower expense ratios compared to mutual funds, making this a cost-effective way to gain exposure to silver.
Cons:
(1) Volatility:
- Silver prices can be volatile, influenced by factors such as global economic conditions, inflation, industrial demand, and geopolitical tensions. As a result, Kotak Silver ETF’s performance may experience significant fluctuations.
(2) Tracking Errors:
- While the ETF aims to replicate the performance of silver, tracking errors may occur due to costs associated with managing the fund and slight discrepancies in the timing of silver price movements.
(3) Limited Diversification:
- The ETF invests almost entirely in silver (about 97-98%), with minimal exposure to other assets. This means it lacks the diversification that would typically spread risk across various asset classes.
(4) Market Risk:
- As with all market-traded assets, the ETF is subject to market risk. If silver prices drop, the ETF will likely experience a decline in value.
Performance:
- 1-Year Return: Approximately 22.32%
- Since Inception: Around 12.29%
While past performance is not a guarantee of future results, these figures demonstrate that the fund has performed well in recent years, in line with silver price movements.
Who Should Invest?
- Investors Seeking Exposure to Silver: This ETF is an ideal choice for those wanting to invest in silver without the hassles of physical possession.
- Diversification for Portfolio: It can serve as a good hedge in a diversified portfolio, especially in times of inflation or economic uncertainty.
- Long-Term Investors: Given the price volatility of silver, it may be more suitable for long-term investors with a tolerance for risk.
Conclusion:
The Kotak Silver ETF is a solid option for investors looking to gain exposure to silver in a convenient and cost-effective manner. However, potential investors should be aware of the inherent risks in silver investments, including price volatility. It’s recommended to consult with a financial advisor to ensure it fits your investment objectives and risk profile.
What is the ETF code for Kotak silver?
The ETF code for Kotak Silver ETF is SILVER1.
This code is used for trading the ETF on stock exchanges such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India.
Kotak Silver ETF FoF Direct – Growth
The Kotak Silver ETF Fund of Fund (FoF) Direct – Growth is a mutual fund that provides indirect exposure to the performance of silver by investing in the units of the Kotak Silver ETF. Here’s a detailed overview:
| Particulars | Details |
| Fund Name | Kotak Silver ETF Fund of Fund Direct – Growth |
| Launch Date | March 31, 2023 |
| Fund Manager | Jeetu Valechha Sonar |
| Expense Ratio | 0.14% |
| NAV (as of Jan 17, 2025) | ₹12.37 |
| Assets Under Management | ~₹56 Crore |
| Minimum Investment | ₹100 (both Lump Sum and SIP) |
| Exit Load | 0.5% if redeemed within 30 days |
| Risk Category | Very High |
| Benchmark Index | Domestic Silver Prices |
Features:
(1) Objective:
To provide investors with returns that closely correspond to the performance of physical silver by investing in units of the Kotak Silver ETF.
(2) Growth Option:
Under the “Growth” plan, returns are reinvested into the fund, allowing compounding over time.
(3) Investment Horizon:
Best suited for medium to long-term investors looking to diversify their portfolios with exposure to silver.
(4) Convenience:
This FoF is ideal for investors who prefer to invest through SIPs or don’t have a demat account but still want exposure to silver.
Conclusion:
The Kotak Silver ETF FoF Direct – Growth is a convenient and cost-effective option for investors seeking indirect exposure to silver. However, its performance is directly linked to the fluctuations in silver prices, making it a high-risk investment. Ensure this aligns with your financial goals and risk tolerance before investing.
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