Why ICICI Prudential Silver ETF Shifting From LBMA to Domestic Silver Prices Is an Important Signal
What Has ICICI Prudential Mutual Fund Announced
ICICI Prudential Mutual Fund has announced a change in the benchmark for its ICICI Prudential Silver ETF. With effect from January 30, 2026, the scheme will no longer benchmark silver prices to the LBMA AM Fixing Prices (London benchmark) and will instead track domestic silver prices.
While this may appear like a technical change on the surface, it carries deeper implications for ETF tracking accuracy, currency exposure, and how Indian investors experience returns from precious metals.
Such benchmark shifts are rare and usually reflect structural changes in how fund houses view market relevance and investor alignment.
Understanding the Shift: LBMA vs Domestic Silver Prices
Earlier, the ICICI Prudential Silver ETF benchmarked itself to LBMA AM Fixing Prices, which are global silver reference prices set in London.
LBMA prices reflect international silver dynamics and are quoted in USD. For Indian investors, returns from such benchmarks are influenced not just by silver prices but also by USD-INR currency movements.
By shifting to domestic silver prices, the ETF’s benchmark will now reflect silver prices discovered within India, which already factor in import duties, taxes, logistics costs, and local demand-supply conditions.
Why This Move Is Strategically Interesting
The move aligns the ETF more closely with the actual price Indian investors pay for silver.
For most Indian investors, physical silver and domestic spot prices matter far more than international LBMA quotes. Benchmarking to domestic prices reduces tracking distortion between ETF performance and real-world silver valuation in India.
It also lowers the indirect influence of currency volatility. While domestic silver prices still reflect global trends, the impact of sudden USD-INR swings on ETF returns may become less pronounced.
Implications for ETF Tracking and Volatility
This benchmark change can potentially improve tracking efficiency for Indian investors.
ETFs tracking international benchmarks often face small but persistent tracking differences due to currency conversion, timing mismatches, and cost adjustments. A domestic benchmark simplifies this structure.
However, it also means that returns may diverge from global silver charts that investors commonly follow. This is important for those comparing ETF performance with international silver price movements.
What This Signals About Precious Metal Investing in India
The shift reflects a broader trend of localisation in financial products.
As Indian commodity markets deepen and participation grows, domestic price discovery is becoming more robust. Fund houses increasingly prefer benchmarks that mirror investor experience rather than purely global references.
This also aligns with growing regulatory emphasis on transparency, suitability, and relevance for retail investors.
Does This Change the Investment Case for Silver
The benchmark shift does not change silver’s core investment thesis.
Silver remains a hybrid asset—part precious metal, part industrial commodity. Its long-term drivers continue to be global monetary trends, industrial demand (especially in electronics and renewable energy), and central bank policies.
What changes is how returns are reflected for Indian investors: more closely aligned with domestic realities and less dependent on overseas benchmarks.
Investor Takeaway
ICICI Prudential Silver ETF’s decision to move away from LBMA benchmarks and adopt domestic silver prices is a subtle but meaningful shift. It improves alignment between ETF performance and Indian silver pricing, potentially enhancing investor clarity.
Investors should note that while global silver trends still matter, ETF returns will now mirror domestic price behaviour more closely. Understanding this distinction will be key when tracking performance and setting expectations.
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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.
