Investors Are Rushing to Silver ETFs Here’s What You Should Know 2025

REAL ESTATE2 weeks ago

In recent years, Silver Exchange Traded Funds (ETFs) have been gaining popularity in India. While gold has long been the favorite among Indian investors, silver is fast catching up, especially in the ETF format. With increasing market awareness, improved accessibility, and the growing importance of diversification, many investors are now turning their attention to silver ETFs as a smart and modern investment option.

In this article, we’ll explore what silver ETFs are, how they work, why they are becoming popular in India, and what potential investors should keep in mind.

What Are Silver ETFs?

A Silver ETF is a type of exchange-traded fund that tracks the price of silver. Instead of physically buying silver bars or coins, investors buy units of the ETF, which are traded on stock exchanges just like shares.

These ETFs invest in physical silver, stored securely in vaults by the fund house or a trusted third party. As the price of silver rises or falls, so does the value of the ETF unit. This makes investing in silver much safer, cleaner, and more convenient than handling physical metal.

Why Are Silver ETFs Gaining Popularity in India?

There are several reasons behind the growing interest in silver ETFs among Indian investors:

1. Low Entry Cost

Compared to physical silver or other commodities, silver ETFs allow small-ticket investments. Even a few hundred rupees can get you started. This opens the door for retail investors and young professionals.

2. No Storage or Purity Concerns

Since the silver is stored securely by the fund, investors don’t have to worry about theft, damage, or purity—all of which are real concerns with physical silver.

3. Easy to Buy and Sell

Silver ETFs are traded on major stock exchanges like NSE and BSE. You can easily buy or sell them through your demat account, just like you would with shares.

4. Diversification

Adding silver to your portfolio allows for better diversification, especially during uncertain economic periods. Silver often performs well when stock markets are volatile.

5. Inflation Hedge

Like gold, silver is also considered a hedge against inflation. When inflation rises, silver prices usually go up, helping protect your purchasing power.

Performance of Silver ETFs in India

Silver ETFs were introduced in India only recently. The Securities and Exchange Board of India (SEBI) allowed mutual funds to launch silver ETFs in late 2021. Since then, several fund houses have jumped on the bandwagon.

Some of the top-performing silver ETFs in India include:

Nippon India Silver ETF
ICICI Prudential Silver ETF
Aditya Birla Sun Life Silver ETF
HDFC Silver ETF

These funds have shown strong performance over the past year, in line with rising global silver prices. Analysts believe silver ETFs could become a long-term fixture in Indian portfolios, just like gold ETFs.

Recent Market Trends and Updates

1. Surge in Silver Prices

In 2024 and 2025, global silver prices have risen due to increased demand from both investors and industries. Silver is heavily used in electronics, solar panels, and electric vehicles, adding to its demand.

This dual nature of silver as a precious metal and an industrial commodity makes it more attractive than gold in some ways.

2. Retail Participation Growing

According to AMFI (Association of Mutual Funds in India), retail investment in commodity ETFs, including silver, has grown steadily over the past two years. More investors are now aware of this investment avenue.

3. Taxation Clarity

Silver ETFs are taxed like debt mutual funds, meaning short-term gains (if held for less than 3 years) are taxed as per your income slab, while long-term gains are taxed at 20% with indexation. This clarity has helped boost investor confidence.

How to Invest in Silver ETFs

Investing in a silver ETF is simple. Here’s how you can do it:

Open a Demat and Trading Account
You’ll need an account with a registered stockbroker.
Choose a Silver ETF Scheme
Compare different funds based on their expense ratio, liquidity, and past performance.
Place Your Order
You can buy units directly from the stock exchange during trading hours.
Track Your Investment
Monitor your ETF just like any other stock or mutual fund.

Risks and Considerations

While silver ETFs are convenient and promising, they are not risk-free. Here are a few things to keep in mind:

Volatility: Silver prices can be highly volatile, especially in the short term.
Currency Risk: Since silver prices are linked to global markets, rupee-dollar fluctuations can impact returns.
Limited Historical Data in India: Silver ETFs are relatively new in India, so there’s less local performance history to analyze.

Experts suggest that silver ETFs are best suited for long-term investors who are looking to diversify beyond gold and equities.

Expert Views

Financial planners recommend allocating 5-10% of your portfolio to precious metals like silver and gold. According to Anil Ghelani, Head of Passive Investments at DSP Mutual Fund, “Silver ETFs offer a cost-effective and secure way to add exposure to silver without worrying about logistics and purity.”

Radhika Gupta, MD & CEO of Edelweiss AMC, recently commented, “We see strong potential in silver ETFs, especially as investors become more aware of commodity diversification.”

Final Thoughts

Silver ETFs in India are a rising star in the investment world. With their low entry point, easy liquidity, and potential for strong returns, they offer a smart and modern way to invest in silver. While gold will always have its charm in Indian households, silver is steadily carving its own path in the world of ETFs.

Whether you’re a seasoned investor or just starting out, silver ETFs deserve a place on your radar.