According to the press release, the scheme will generate returns by investing in units of Gold and Silver ETFs; the daily weights shall be market driven with the starting (NFO) allocation of 70:30. The maximum weight is capped at 90%, subject to quarterly review. The initial higher allocation to Gold is on account of it having higher economic value and being highly liquid. Additionally, it is relatively more stable as compared to silver.
Why should you consider adding Gold & Silver in your portfolio?
Gold is extensively used in jewelry and is often considered a ‘safe haven’, as it tends to do well during market uncertainty. In contrast silver has wide industrial applications and generally does well during business recovery periods. Exposure to both metals helps portfolios do well in both turbulent times and during recovery periods. Investors who want to all both silver and gold to their portfolio can choose this scheme.
“With an objective to bring new investment opportunities, Motilal Oswal AMC has launched the Gold and Silver ETFs FOFs. This offers a huge diversification mix as both Gold and Silver have a low correlation to equities and thus act as a good diversifier. Both metals offer good downside protection and tend to outperform in bear markets. While Silver tends to outperform when the market is recovering from a bear phase. With this scheme, the investors will be able to mitigate risks against the market volatility while enjoying the portable wealth and rising economic values,” said Pratik Oswal, President – Passive Business, Motilal Oswal Asset Management Company.
“Gold and silver have been preferred assets for Indian households for ages. These precious metals had been acquired and kept in the physical forms. However, we are witnessing high inflation around the world. Central banks across have resorted to rate hikes and neutral system liquidity to tackle the runaway inflation. Gold is a hedge against inflation, protects against the erosion of wealth, and acts as a store of value in such times. Even the world’s elite turn to precious metals to protect their fortunes, as both metals never lose their value. Apart from investment, jewelry & silverware, Silver has major industrial applications including green technologies,” says Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company.
Agarwal added, “We are at an interesting juncture as the advanced economies of the US and Europe are at risk of slipping into a recession whereas India is showing very growth prospects.”