According to the fund house, “Investment inflows into silver have soared globally, with silver-backed ETFs and other investment products seeing record additions. In the first half of 2025 alone, global silver ETFs added about 95 million ounces – exceeding the total inflows of the entire previous year – pushing total holdings to an all-time high of ~1.13 billion ounces (worth over $40 billion) by mid-2025.”
Also Read | Large, mid, and small caps see drop in monthly inflows in September. Are investors turning cautious?
The domestic silver prices in the current calendar year so far have jumped by 53% outperforming gold amid a broader bullion rally, whereas gold prices have jumped nearly 49% during the period.
Analysts believe that silver ETFs are catching the attention of investors as some are building allocations, while some are chasing returns.
“Passive ETFs have also seen growth, with gold ETFs maintaining momentum and other ETFs rising from about Rs 1,500 crore last month to more than Rs 8000 crore now. Silver ETFs are catching attention too, as some investors are building allocations while others are chasing returns. We see interest in gold and silver continuing to persist unless there is a sharp correction,” said Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India).
In 2025 so far, silver ETFs have offered up to 70.09% average return. Axis Silver ETF has offered the highest return of around 86.67%, followed by Mirae Asset Silver ETF, which gave a 86.63% return. Tata Silver ETF gave the lowest return of around 68.44% in 2025 so far.
Another expert mentions that the September data underscores the increasing role of precious metals in long-term wealth diversification.
According to Kartik Jain, MD & CEO, Shriram AMC, “The September data underscores the increasing role of precious metals in long-term wealth diversification. For investors, it’s a reminder that balancing traditional equity and debt hybrid strategies along with strategic asset allocation to metals can strengthen portfolios against economic uncertainties, while tapping into avenues for long-term growth.”
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The premium on Indian silver price over global surged from nearly 0.5% in early September to 5.7% on October 9, with intraday spikes up to 12%.
India’s silver exchange-traded funds (ETFs) are facing unprecedented dynamics amid a storm of skyrocketing demand and constrained supply. A confluence of factors – from record festive buying to global supply deficits – has driven domestic silver prices to record highs and pushed ETF prices to trade at steep premiums over international benchmarks like LBMA Silver Price, said Axis Mutual Fund.
India’s physical demand for silver has surged ahead of the festive season. With Dhanteras and Diwali approaching — traditionally peak periods for purchasing precious metals — buyers rushed to stock up on silver. In September, India’s silver imports nearly doubled compared to the same month last year, as bullion dealers and jewellers scrambled to secure inventory despite record-high prices. This heightened buying has created a short-term supply crunch in the domestic market
Retail investors are flocking to silver ETFs and FoFs, which is further driving up the net asset value (NAVs,) and investors are facing challenges in fair valuation, especially when ETF units are priced above the intrinsic value of Silver in the spot market.
In response to domestic silver currently trading at a significant premium compared to international prices due to acute scarcity in India’s physical silver market, Kotak Mutual Fund on Thursday announced that it has temporarily suspended lumpsum/switch-in subscriptions in its silver ETF Fund of Fund with effect from October 10.
Also Read | Silver ETF: Kotak MF temporarily halts lumpsum and switch-in subscriptions in FoF
While cautioning investors, Axis Mutual Fund said that if and when India’s silver supply catches up, the local price premium could evaporate – and ETF/FoF NAVs might drop even if international silver prices stayed flat or a portion of the price you’re paying now (the premium) might “wash out” as supply normalises.
“Silver is increasingly seen as a strategic allocation (for diversification and as a hedge, much like gold) and therefore, irrespective of the near-term price risk, investors looking for medium to long-term allocation should not worry due to short-term price distortion if the investment horizon is multi-year,” Axis Mutual Fund recommends.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
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