As the demand for silver grows, should you consider investing in silver ETFs now?
Silver ETFs surge in popularity
Assets under Management (AUM) for silver ETFs grew more than four-fold, reaching ₹12,331 crore in October 2024, compared to ₹2,844.76 crore a year earlier.
This surge comes on the back of a dramatic increase in silver sales, not just in physical form, but also through ETFs.
The number of folios in silver ETFs has jumped by 215%, rising to 4.47 lakh in October 2024 from just 1.42 lakh last year.
Net inflows have also seen a healthy rise, growing 24% year-on-year to ₹643.10 crore in October 2024.
According to ICRA Analytics, the growth of silver ETFs highlights the increasing preference among retail investors, driven by easier access and transparency compared to physical silver.
Unlike physical silver, which involves storage challenges and additional costs like GST, silver ETFs offer better liquidity and ease of trade.
These ETFs are listed on exchanges, allowing investors to buy and sell units easily.
Return comparison: Silver vs. Gold ETFs
The returns from silver ETFs have clearly outshone gold ETFs in recent months.
Here’s a snapshot of the performance for both over different periods:
| Returns (in %) | Silver ETFs | Gold ETFs |
| 1 Month | 7.57% | 5.32% |
| 3 Months | 16.02% | 14.29% |
| 6 Months | 20.25% | 10.29% |
| 1 Year | 32.49% | 28.07% |
(Source: ICRA Analytics)
As shown above, silver ETFs have delivered superior returns across all timeframes, especially over the 1-year period.
Top-performing silver ETFs
Here are some of the top performers:
| Scheme Name | 1 Month | 3 Months | 6 Months | 1 Year |
| Aditya Birla Sun Life Silver ETF | 7.62% | 16.05% | 20.03% | 32.61% |
| Axis Silver ETF | 7.6% | 16.04% | 21.98% | 31.43% |
| DSP Silver ETF | 7.59% | 16.04% | 20.09% | 32.57% |
| HDFC Silver ETF | 7.58% | 15.97% | 22.53% | 33% |
| ICICI Prudential Silver ETF | 7.61% | 16.05% | 19.99% | 32.57% |
(Source: ICRA Analytics)
The silver outlook: Why demand will likely persist
Silver demand is expected to remain strong due to several factors, including its use in electronics and green technologies.
Geopolitical tensions and inflationary pressures could also prompt more investors to view silver as a safe-haven asset, boosting its price.
Additionally, the US Federal Reserve’s likely interest rate cuts may further propel silver prices upwards.
According to Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, “Silver prices are expected to remain attractive as the expectation is that the US Federal Reserve will continue to cut interest rates in the coming months, giving a boost to silver prices. Demand for silver is expected to remain upbeat due to its usage in electronics and green technologies. Moreover, investors often prefer investment in silver for portfolio diversification and it is often seen as a hedge against inflation.”
Furthermore, recent changes in customs duties and tax structures have made investing in silver more attractive, giving investors additional reasons to consider silver ETFs as part of their portfolios.
Should you invest in silver ETFs now?
Silver ETFs offer a compelling investment opportunity, especially in uncertain economic times. If you are looking for a way to diversify your portfolio and hedge against inflation, silver ETFs are worth considering.
However, as with any investment, it’s important to assess your risk tolerance and financial goals before investing.
