What is Gold And Silver ETFs & FOFs
Gold ETF
Gold ETF is a MF Scheme which invests in physical gold bars with purity of 99.5% fineness or above. A Gold ETF Fund of Fund (FoF) invests in Gold ETF units.
Silver ETF
Silver ETF is a MF Scheme which invests in physical silver with purity of 99.9% fineness or above. A Silver ETF Fund of Fund (FoF) invests in Silver ETF units.
Fund of Fund (FoF)
Investing in gold or silver through the MF route gives investors the twin benefit of an investment physically backed by the metal with the simplicity of transacting digitally.
- SIP, STP, SWP available
- Daily redemption at NAV
- No Demat account required
Portfolio Diversification
Gold and silver are considered to balance portfolios against the volatility of other asset classes.
Buffer against Currency Depreciation
Being globally priced metals, gold and silver act as a hedge against currency depreciation.
Buffer against Geopolitical Shocks
Investors generally turn towards gold and silver when adverse geopolitical events occur.
Improved Taxation
Post Union Budget of July 2024, taxation of ETFs and FoFs has been improved.
Silver offers all the benefits of a precious metal investment — plus something extra.
The New-Age Technology Advantage
Silver is not just a store of value — it is a critical industrial metal, increasingly used in emerging technologies:
As global adoption of these technologies grows, demand for silver is expected to rise — giving Silver ETF investors potential upside beyond just the metal's traditional value.
Both let you invest in gold or silver through a Mutual Fund. The difference is in how they work:
| Feature | ETF | Fund of Fund (FoF) |
|---|---|---|
| What it invests in | Physical Gold / Silver directly | Units of a Gold / Silver ETF |
| Demat Account needed? | Yes | No |
| SIP / STP / SWP | Limited (broker-dependent) | Fully available |
| Liquidity | Traded on exchange during market hours | Daily redemption at NAV |
| LTCG Holding Period | 12 months | 24 months |
| LTCG Rate | 12.5% (holding > 12 months) | 12.5% (holding > 24 months) |
Convenience and Safety
No hassle of storing physical gold or silver.
Purity
ETF holds atleast 99.5% fineness gold / 999 fineness silver (as prescribed by SEBI). FoF investors also benefit from purity.
Liquidity
Market Makers on Stock Exchanges ensure liquidity for ETFs. Daily investment & redemption available for FoF.
Small Ticket Investing
SIPs and SIP / STP / SWP facilities available.
Portfolio Buffer
Against volatility and geopolitical shocks.
Digital Convenience
With gold or silver backing.
Disciplined Investing
Regular investing via FoF SIP.
FAQs
Yes. Both invest in the physical metal of certified purity and track its market price. The key difference is the underlying commodity and demand factors — gold is primarily a financial asset, while silver has significant industrial use as well.
For ETFs (both Gold and Silver) - yes. For Fund of Funds - no. You can invest in FoFs directly through any Mutual Fund platform, just like any other Mutual Fund scheme.
Yes — through the FoF route. SIP, STP, and SWP are fully available for Fund of Funds. For ETFs, you would need to set up a recurring purchase through your broker.
The physical metal held by the fund must meet specific purity standards (99.5% for gold, 99.9% for silver) and is audited regularly by independent agencies.
Precious metals are generally considered long-term investments. They work best as part of a diversified portfolio, not as a standalone investment.
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