Silver ETFs’ AUM crosses ₹13,500 crore within three years of launch. Time to invest?

The response for the silver exchange traded funds (ETFs) has been quite strong since their launch three years ago, suggesting the rising lure of investing in precious metals by Indian investors.

Silver ETFs, which were allowed by the capital market regulator Securities and Exchange Board of India (SEBI) in November 2021, has seen their assets under management or AUM cross the ₹13,500 crore mark by January 2025, according to data by Zerodha Fund House. In a little over three years, 12 silver ETFs have been launched by fund houses, with over six lakh folios.

Vaibhav Jalan, CBO of Zerodha Fund House said, “The increasing transaction volumes of silver ETFs are a clear indication of growing investor interest. These ETFs offer an alternative to physical silver ownership, addressing concerns about storage, security, and insurance while providing access to silver’s price movements.”

Silver: Demand vs Supply

While silver has diverse applications, in India it has traditional significance, especially during marriages and festivals.

Apart from this, it has high industrial usage, with the while metal proving to be a vital commodity in sectors like solar industry and manufacturing. It’s also used for making jewellery and investment purposes, contributing to its demand.

Since 2021, Zerodha Fund House said, the demand for the silver metal has outpaced its supply, sparking a rise in prices.

According to the estimates by ‘The Silver Institute’, the overall industrial demand for Silver has increased by more than 55% driven by its applications across various industries, including automotive, technology, pharmaceuticals, and solar energy. Silver is also used in manufacturing and industrial fabrication since it does not corrode and has good thermal properties.

Should You Invest?

Analysts see a strong runway for silver prices in 2025. With the silver metal prices trading at ₹100,450 per kg in the futures market, analysts expect a further rally to ₹1,17,000 in the next 12 months.

As per Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, silver has traded in defined ranges since 2017, with previous breakouts leading to sharp rallies. Given silver’s historical trend of surging by 50 per cent from prior highs, Sheth projected a potential target of ₹1.17 lakh in the next 12 months.

Meanwhile, Vishal Jain, CEO of Zerodha Fund House, said, “Silver has the potential to play a role in both investment portfolios and modern industries. Silver ETFs are a valuable tool to diversify one’s portfolios and capitalise on the metal’s unique characteristics.”

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.