Silver FoFs (fund of funds) have delivered exceptional returns, gaining 30.3 percent annually over the last three years. Further, silver FoFs gained a little over 17.2 percent over the last five years.
On the other hand, equity-oriented FoFs, benchmarked against the Nifty 500 TRI, fell around 5 percent over the past year, dragged down by small- and flexi-cap strategies. Over three years, they delivered 12.4 percent annually, below the benchmark’s 16.1 percent, and five-year returns averaged 11.2 percent, compared with the index’s 13.6 percent.
Meanwhile, hybrid FoFs, measured against the CRISIL Hybrid 50:50 Index, returned 5.5 percent over the last one year, while three- and five-year returns were 9.8 percent and 8.6 percent, respectively. Debt-oriented FoFs, aligned with the CRISIL Short Term Bond Index, stayed steady at 7.8 percent for the year, in line with the benchmark.
According to Anil Ghelani, Head of Passive Investments and Products at DSP Mutual Fund, the rally is a reflection of strong silver prices. “Silver has been moving sharply, with gains of up to 5 percent in a single day recently. When the underlying silver ETFs rise, the FoF versions follow, which makes them attractive,” he said.
As of September 1, the top 15 performing FoFs across all categories—Silver, Hybrid, Debt-Oriented, and Equity-Oriented—were dominated by silver funds. Leading the list, UTI Silver ETF FoF-Reg(G) returned 41.99 percent, followed by Tata Silver ETF FoF-Reg(G) at 41.92 percent, HDFC Silver ETF FoF-Reg(G) at 41.72 percent, and Nippon India Silver ETF FoF-Reg(G) at 41.59 percent. Other strong performers included Kotak, ICICI Prudential, Axis, SBI, and Aditya Birla Sun Life Silver FoFs, all posting returns above 40 percent.
Vishal Jain of Zerodha MF highlighted the growing interest in silver ETFs in recent years. “If you look at commodities, particularly silver, over the last three to four years, demand has surged—driven by industrial uses like EVs and batteries. That has generated a lot of interest in silver ETFs and fund-of-funds. Before 2022, exposure was mostly limited to physical silver, but SEBI allowed silver ETFs and fund-of-fund structures after that, making it much easier for investors to participate,” he said.
Jain added that fund-of-fund structures are gaining traction because they are more accessible. “ETFs require a demat and trading account, whereas fund-of-fund structures let investors directly subscribe through the AMC or aggregator platforms like Coin or Groww. They’re also more convenient for SIPs (Systematic Investment Plan), SWPs (Sytematic Withdrawal Plan), and STPs (Systematic Transfer Plan), which is why fund-of-fund structures have become popular among retail investors,” he said.
FoFs invest in other mutual funds or ETFs rather than directly in stocks or bonds. Silver FoFs, for example, invest in silver ETFs, which hold physical silver. This structure provides diversification and convenience, with only a small additional cost.
For instance, Ghelani explained that the DSP Silver ETF has a total expense ratio (TER) of 0.4 percent, while the DSP Silver ETF FoF has a TER of 0.6 percent. Together, the cost remains capped at 1 percent, as per SEBI rules. Investors benefit as they do not need a demat account or pay brokerage charges.
The category has grown steadily, managing nearly Rs 5,000 crore across 12 schemes, compared with Rs 53,782 crore in hybrid FoFs. Flows into silver ETFs and FoFs have picked up sharply—from Rs 1,400 crore in 2022 to Rs 8,600 crore in 2024, and Rs 6,800 crore in the first seven months of 2025, with July alone contributing Rs 1,900 crore.
Adoption, however, has been gradual. “Culturally, Indians have preferred physical gold or silver. Even today, many would rather buy physical metals than a gold ETF. Fund-of-funds are still catching up, mainly serving retail investors slowly warming up to these products,” says Jain.
Looking ahead, experts say silver’s performance will depend on global conditions, given its dual role as a precious and industrial metal. If geopolitical tensions ease, safe-haven demand could ease, though industrial applications may continue to support prices. Ghelani recommends that investors allocate 5–7 percent of their portfolio to silver. While not a core holding like equities, silver has carved out a place as a valuable satellite allocation.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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