Tata Mutual Fund launches the Tata Silver ETF Fund of Fund; all you need to know

What kind of mutual fund scheme is this?

This is an open-ended fund of fund scheme investing in the Tata Silver Exchange Traded Fund.

Also Read: Tata Mutual Fund launches Tata Gold Exchange Traded Fund

What is the main objective of investing in this fund?

The investment objective of the scheme is to provide returns that are in line with returns provided by the Tata Silver Exchange Traded Fund. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved.

Speaking at the launch, Anand Vardarajan, Business Head – Institutional Clients, Banking, Alternate Investments and Product Strategy, Tata Asset Management said, “Silver has ornamental, decorative and also industrial use cases. Many emerging industries have seen rising use of silver and not surprisingly it is seen as the rising metal. Both gold and silver can make a compelling allocation in an investor’s portfolio giving a balance of diversification and providing some hedge.”

Also Read: Tata Mutual Fund launches the Tata Gold ETF Fund of Fund

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Under normal circumstances, the asset allocation of the scheme will be as follows:

Are there similar mutual funds in the market?

To date, many asset management companies (AMCs) have launched such silver exchange-traded funds (ETFs), thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:

How will the scheme benchmark its performance?

The scheme will be investing substantially in the Tata Silver Exchange Traded Fund (TSETF). The underlying benchmark for TSETF is the domestic price of silver Hence, the domestic price of silver is the appropriate benchmark for performance comparison. Performance comparisons for the scheme will be made vis-à-vis the benchmark. 

However, the scheme’s performance may not be strictly comparable with the performance of the benchmark, primarily due to the inherent differences in the construction of the portfolio and expense ratio. Since there is no suitable index available for silver or instruments linked to silver, the performance of the scheme will be benchmarked against the domestic price of silver.

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be calculated as under:

– Redemption/Switch-out/SWP/STP on or before the expiry of 365 days from the date of allotment: If the withdrawal amount or switched-out amount is not more than 12% of the original cost of investment- Nil.

– Redemption/Switch-out/SWP/STP on or before the expiry of 365 days from the date of allotment: If the withdrawal amount or switched-out amount is more than 12% of the original cost of investment-1%.

– Redemption/Switch-out/SWP/STP after expiry of 365 days from the date of allotment-Nil.

Who will manage this scheme?

Tapan Patel is the designated fund manager of this scheme.

Does the fund contain any inherent risk?

The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.

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Published: 02 Jan 2024, 05:34 PM IST