Bandhan Mutual Fund Launches Gold and Silver ETFs: What Investors Need to Know

In the world of investing, the spotlight often stays fixed on the stock market (Nifty and Sensex). However, over the last few years, the "quiet achievers", Gold and Silver, have delivered remarkable returns, significantly outperforming traditional equities.

Recognising this shift in market dynamics and investor interest, Bandhan Mutual Fund is launching two new funds: the Bandhan Gold ETF and the Bandhan Silver ETF.

If you are looking to understand why precious metals are currently trending and whether these new funds fit into your portfolio, this deep dive covers everything you need to know.

The Recent Surge: Gold and Silver in the Spotlight

Before examining the specific funds, it is essential to consider the broader market. Recently, both Gold and Silver have beaten the returns of the Nifty 50, drawing the attention of retail investors across India.

The Data Speaks Volumes:

• Gold’s Growth: The Assets Under Management (AUM) for Gold ETFs in India have seen a massive rise, growing from roughly ₹14,700 crores in June 2023 to over ₹1,02,000 crores by October 2025.
• Silver’s Rise: Silver ETFs have seen even sharper adoption, jumping from a modest ₹1,651 crores in early 2023 to over ₹42,000 crores by mid-2025.

What is Driving This Growth?

It isn't just random speculation driving these prices; there are fundamental economic factors at play:

For Gold:

1. Central Bank Buying: Global central banks are purchasing record amounts of gold, over 1,000 tonnes annually, which is double the average of the last decade. When big banks buy, it supports the price.
2. Geopolitical Uncertainty: In times of global conflict or instability, investors flock to Gold as a "haven."
3. Dollar Weakness: Gold typically has an inverse relationship with the US Dollar. When the Dollar weakens, Gold prices tend to strengthen.

For Silver:

1. Supply Deficit: We are witnessing a "tug of war" where supply is tight, but demand is rising. For four consecutive years, there has been a deficit in silver supply.
2. Industrial Demand: Unlike gold, silver is heavily used in industries, particularly in green energy (solar panels) and Electric Vehicles (EVs). As these sectors grow, so does the demand for silver.

Why Consider Precious Metals for Your Portfolio?

People usually make this mistake of holding only stocks or fixed deposits. Here is why adding commodities like Gold or Silver is often recommended for a balanced portfolio.

1. Superior Recent Performance

The numbers over the last 3 years (leading up to late 2025) show a clear trend:

• Gold delivered a 37.9% return.
• Silver delivered a 39.9% return.
• Nifty 50 delivered a 13.9% return.

Note: Past performance is not a guarantee of future results, but this data highlights the recent strength of the metal cycle.

2. The Diversification Edge

Gold and Silver often move independently of the stock market. When stocks crash or face volatility, precious metals often hold their value or increase. This "non-correlation" helps stabilise your portfolio during financial crises.

3. The Valuation Signal (Why Silver?)

Investors often look at the Gold/Silver Ratio to see which metal is cheaper. Currently, this ratio stands at 86, which is well above the 25-year average. Historically, a high ratio suggests that Silver is undervalued compared to Gold, potentially offering room for growth.

Understanding the Risks

While the returns look attractive, it is vital to remain neutral and understand the risks involved. ETFs are market-linked instruments, and they are not risk-free.

• Volatility: Silver, in particular, is known for high volatility. Because the market size for silver is smaller than gold, large trades or shifts in sentiment can cause sharp price swings.
• Industrial Dependency: Silver prices are closely tied to industrial health. If there is a global recession and manufacturing slows down, silver demand could drop.
• Currency Risk: Since gold and silver prices are globally determined in Dollars, fluctuations in the Rupee-Dollar exchange rate can impact your returns.

NFO Details: Bandhan Gold & Silver ETFs

If you have decided that precious metals align with your investment goals, here are the details for the New Fund Offer (NFO) launched by Bandhan Mutual Fund.

Common Details for Both Funds:

• NFO Period: 1st December 2025 to 3rd December 2025.
• Minimum Investment: ₹1,000 (and in multiples of ₹1 thereafter).
• Fund Manager: Mr Abhishek Jain.
• Exit Load: Nil (0%).
• Type: Open-ended scheme.

Bandhan Gold ETF:

• Objective: To track the domestic price of physical gold.
• Asset Allocation: 95%-100% invested in physical gold and gold-related instruments.

Bandhan Silver ETF:

• Objective: To track the domestic price of physical silver.
• Asset Allocation: 95%-100% invested in physical silver and silver-related instruments.

Conclusion

The launch of the Bandhan Gold ETF and Bandhan Silver ETF comes at a time when precious metals are enjoying a strong structural rally, driven by central bank purchases and industrial demand.

For a beginner, these ETFs offer a convenient way to invest in Gold and Silver without the hassle of storing physical bars or worrying about purity. They can serve as excellent tools for diversification, protecting your portfolio when equities are volatile.

However, investors should be mindful of the risks, particularly the volatility associated with Silver. These funds are best suited for investors looking to diversify their existing portfolios rather than those seeking short-term speculative gains.

Disclaimer: The content is meant for education and general information purposes only.  Past performance is not indicative of future returns. Mutual Funds are non-exchange traded products, and INDstocks is merely acting as a mutual fund distributor. All disputes with respect to distribution activity, would not have access to the exchange investor redressal forum or arbitration mechanism. Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing. INDstocks Private Limited (formerly known as INDmoney Private Limited) 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), AMFI Registration No: ARN-254564, SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.