Why Are Gold and Silver ETFs FoFs Becoming the New Favorite for First-Time Investors?
First-time investors drawn to the glitter of gold and silver this festive season are turning toward Gold and Silver ETFs Fund of Funds (FoFs) for a balanced and tax-efficient exposure. With gold surging 68% and silver 82% over the past year, experts suggest that such hybrid funds offer a disciplined route for participation while minimizing risk through professional allocation between the two metals.
Financial planners recommend allocating 5–10% of a diversified portfolio to precious metals and maintaining a five-year investment horizon.
“It is difficult for retail investors to decide how much and when to allocate to gold or silver. Such a fund that invests in both metals puts the onus on the fund manager, who is better informed to take a decision and ensures tax efficiency.
Looking to complement your asset allocation this Diwali? Explore our curated Nifty Option Tip to make smarter diversification choices.
Dual Metal Strategy: Stability Meets Growth
Gold and silver behave differently across market cycles — gold acts as a safe haven during uncertainty, while silver captures upside during economic expansion and industrial rallies. The combination of both within a single FoF offers investors a natural hedge between defensiveness and cyclicality.
“While each metal has its own story, combining gold and silver offers investors a powerful way to balance stability and growth within the commodities space,” says Niranjan Avasthi, Senior VP at Edelweiss Mutual Fund. He notes that gold anchors the portfolio during stress, while silver enhances returns during economic upswings.
| Scheme | 1-Year Return (%) | 3-Year Return (%) |
|---|---|---|
| Edelweiss Gold & Silver ETF FoF | 74.7 | 38.9 |
| Motilal Oswal Gold & Silver ETFs FoF | 70.9 | NA |
| Domestic Gold Price | 66.4 | 36.1 |
| Domestic Silver Price | 84.9 | 44.5 |
Source: Value Research. One-year returns absolute, three-year returns annualized.
The dual approach offers downside protection while allowing investors to ride commodity bull cycles. Kotak, Mirae, Edelweiss, and Motilal Oswal now offer these funds, with varying gold–silver splits catering to different risk appetites.
Want to track commodities and index momentum together? Tap into our expert F&O Tip designed for active traders seeking diversification opportunities.
How Leading AMCs Allocate Between Gold and Silver
While Edelweiss maintains a fixed 50:50 allocation between gold and silver, other fund houses follow a dynamic strategy depending on market cycles:
| Fund House | Gold Allocation (%) | Silver Allocation (%) |
|---|---|---|
| Motilal Oswal | 70 | 30 |
| Mirae Asset | 45 | 55 |
| Edelweiss | 50 | 50 |
| Kotak | Dynamic | Dynamic |
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, emphasizes that Gold–Silver FoFs serve as a simple yet effective entry route into commodities for new investors. By diversifying across both metals, investors can achieve balance between capital protection and growth potential. Experts advise using SIPs or staggered purchases post the recent price surge and maintaining a long-term horizon of at least five years.
Discover more well-researched mutual fund insights and portfolio strategies at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Precious Metals Funds
- Should Retail Investors Choose Gold and Silver ETFs FoFs Over Physical Metals?
- How Do Fund Managers Decide Gold–Silver Allocation in ETFs?
- What Are the Tax Benefits of Investing in Gold and Silver FoFs?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
