Motilal Oswal Asset Management Company (MOAMC) will float Motilal Oswal Gold and Silver ETFs Fund of Funds for investors who want to invest in both Gold ETF and Silver ETF at the same time. This new fund offer will open on September 26 (Monday), and close on October 7. The minimum application amount for the Motilal Oswal Gold & Silver ETF FOF is Rs 500, followed by a multiple of Re 1.
It is to be noted here that the fund of funds, also known as a multi-manager investment, is a pooled investment fund that puts money in different types of funds. Basically, these instruments invest in different underlying portfolios of other funds, and replace direct investment in bonds and stocks, like regular exchange-traded funds (ETFs).
Earlier, Edelweiss Asset Management Limited had launched Edelweiss Gold and Silver ETF Fund of Fund, which was the first of its kind in India. The offer was launched on August 24, and was on till September 7. It is an open-ended fund of funds scheme investing in units of Gold ETFs and Silver ETFs and is being managed by Bhavesh Jain and Bharat Lahoti.
A note issued by the company stated that the scheme will generate returns by investing in units of Gold and Silver ETF, where the daily weights shall be market driven with the starting (NFO) allocation of 70:30.
The maximum weight is capped at 90 per cent, which will be subject to quarterly review. Initially, the higher allocation will be towards gold as it has higher economic value and is highly liquid. Besides, it is relatively more stable as compared to the white metal.
The minimum application amount for Motilal Oswal gold and silver ETFs FOFs is Rs 500 and in multiples of Re 1 thereafter. On an ongoing basis, an investor can purchase/redeem units of the scheme through a financial advisor or can directly do it on www.motilaloswalmf.com.
Gold and silver investment
In terms of investment, gold is extensively used in jewelry and is often considered a safe haven in volatile times as it tends to do well when the market fluctuates and uncertainty is at a high. In contrast, silver has wide industrial applications and generally does well during business recovery periods.
The company has also highlighted the new scheme will offer a huge diversification mix as both Gold and Silver have a low correlation to equities and thus act as a good diversifier. Both metals have offered good downside protection in the past and are expected to perform well despite bearish sentiments.
It is known that while gold is a hedge against inflation, and it protects against the erosion of wealth, silver tends to outperform when the market is recovering from a bear phase. The company has stressed that the investors will be able to mitigate risks with the scheme against the market volatility while enjoying the portable wealth and rising economic values.
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