Motilal Oswal MF files for precious metals fund of funds scheme

Asset management company Motilal Oswal Mutual Fund has applied for Motilal Oswal Precious Metals FoFs, an open-ended fund of funds scheme that will invest in units of gold and silver exchange-traded funds (ETFs). As of now, there are no products that invest in both silver and gold in India.

Silver ETFs were recently allowed to be launched by markets regulator, the Securities and Exchange Board of India (Sebi), while gold ETFs have been available in the Indian market since 2007.

Notably, ICICI Prudential Mutual fund had applied for a precious metals fund of funds in December 2021 and is yet to get the regulator’s approval.

As per the scheme information document (SID) of Motilal Oswal Precious Metals FoFs filed with Sebi, the scheme targets a minimum amount of 10 crore during the new fund offer (NFO) period.

“This is the minimum amount required to operate the scheme and if this is not collected during the NFO period, then all the investors would be refunded the amount invested without any return,” the fund house said in the SID.

In the document, the AMC highlighted that benchmark to the scheme would be the domestic price of gold and silver as derived from the LBMA AM fixing prices, as there is no publicly available index that tracks the price of gold and silver bullion and instruments with gold and silver as underlying.

The benchmark, The London Bullion Market Association (LBMA) price will be in the ratio of 70% gold and 30% silver.

Motilal Oswal MF has proposed that fund manager, Abhiroop Mukherjee, would decide the allocation towards units of gold ETFs and/or silver ETFs.

Further, it has been proposed that Motilal Oswal Precious Metals FoFs will have an exit load of 1% if units are redeemed on or before 15 days from the date of allotment and nil, thereafter.

The first two silver ETFs schemes — Aditya Birla Sun Life Silver ETF and ICICI Prudential Silver ETF — were launched last month.

As per data available with Value Research Online, ICICI Prudential’s scheme, which was launched on 21 January has assets under management (AUM) of 106 crore as of 31 January, and has delivered -2.24% returns (as of 11 February) since launch. Aditya Birla Sun Life’s silver scheme has an AUM of 17 crore and is up 2.69% since launch.

Nippon India ETF Gold BeES, launched in March 2007, is the biggest gold ETF in the country with assets of 6,217 crore.

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