NFO Pick – (Axis Gold and Silver Passive FOF)

17 Dec 2025 , 05:52 PM

THE CASE FOR ADDING GOLD AND SILVER TO YOUR PORTFOLIO 

Here are some compelling reasons to add gold and silver to your portfolio. 

• Both gold and silver have low to negative correlation with equities and bonds. This helps diversify the portfolio.

• Historically, gold has been a hedge against inflation. In the Indian context, gold is also the best hedge against a weak dollar.

• Both gold and silver are considered a safe haven and have historically done much better during times of war, strife, or elevated macro risks.

• Silver has the additional benefit of industrial applications across EVs, defence, aerospace, electronics etc; adding industrial alpha to the safe haven argument. 

Let us turn to the drivers of gold and silver prices. 

WHAT IS DRIVING THE RALLY IN GOLD AND SILVER 

Gold and silver have been in the midst of a frenetic rally in 2025.  Here is why. 

• It has been 4 years of geopolitical uncertainty stretching across, Ukraine, Israel, Middle East, Iran, Russia, China, Taiwan, and India. That boosted demand for precious metals.

• Persistent interest rate cuts by the US Fed helped gold and silver prices, as it reduces the opportunity cost of holding these precious metals.

• Central banks globally have been buying gold to de-risk their dependence on the US dollar and that has resulted in peak gold demand.

• While gold and silver are seeing investment demand, silver is also seeing rising demand from defence and EV applications as the energy story is changing. 

HOW TO COMBINE GOLD AND SILVER IN YOUR PORTFOLIO? 

The idea of Axis Gold and Silver Passive FOF is to offer a formula-based and research-driven approach to combining gold and silver. In the last few years, silver has emerged as a major alternative to gold in the precious metals space, especially from an investment perspective. Both gold and silver offer a safe haven hedge, with silver offering the additional benefit of industrial applications in electronics, aerospace, and green cars. 

Astute investors need to look beyond traditional assets. From the traditional 60:40 between equity and debt; the new order is about 60:20:20 between equity, debt, and precious metals. The Axis Gold and Silver Passive ETF enables a rule-based combination these 2 precious metals. More importantly, any churn between gold and silver is done by the fund and is tax neutral for the investor. 

GLANCE AT AXIS GOLD AND SILVER PASSIVE FOF 

Here are key details of the Axis Gold and Silver Passive FOF. 

• NFO opened on December 10, 2025 and closes on December 22, 2025. It is an open-ended fund investing in units of gold ETFs and Silver ETFs. Being an FOF, having trading account and demat account is not mandatory like in case of ETF.

• On the risk-o-meter, Axis Gold and Silver Passive FOF is classified as “Very High Risk,” due to its substantial exposure to gold and silver; both volatile asset classes. Also, in price terms, gold and silver are trading at historic highs.

• Axis Gold and Silver Passive FOF is best suited to investors looking at wealth creation in the long run, with a calibrated combination of gold and silver to the portfolio to improve diversification of risk through negative correlation with equity.

• An Exit load of 0.25% of the redemption value will be applicable if redeemed / switched out within 15 days of the date of allotment. There will be no exit load after 15 days. The TER will be duly announced.  An investment horizon of 5-7 years is recommended.

• Minimum application amount in NFO is ₹100 and in multiples of ₹1 thereafter. Additional purchases can be done with minimum ₹100. Only growth option is available, but investors can choose between regular and direct investment plans. 

• The designated fund managers for the scheme are Pratik Tibrewal and Aditya Pagaria. Fund performance will be benchmarked to the Price of Gold and Silver (50:50). There are no assured returns on the fund, and is subject to the tracking error risk.   

• The fund will divide its corpus between Gold ETFs and Silver ETFs, with minimum allocation of 35% and maximum possible allocation of 65% to either asset class. The fund will strive to keep the mix around 50:50, with minor variations. 

Let us finally look at the taxation aspect. 

TAX TREATMENT OF RETURNS ON THE FUND 

Axis Gold and Silver Passive FOF will be classified as a non-equity fund for income tax purposes. Here are some unique points to understand. 

• What about classification of STCG and LTCG? Gold and Silver ETFs are listed and, in that case, the cut-off for LTCG is 12 months. However, AXIS FOF being a derived product, will be treated as non-equity unlisted product. Hence cut-off for LTCG will be 2 years.

• If the Axis Gold and Silver Passive ETF is sold on or before 24 months, it will be classified as short term capital gains (STCG). In such cases, the gains will be taxed at the peak rate of tax applicable to the investor.

• However, if the Axis Gold and Silver Passive ETF is sold after 24 months, it will be classified as long term capital gains (LTCG). In that case, the gains will be taxed at 12.5% of the net gains, without any benefit of indexation. 

The biggest tax benefit that the Axis Gold and Silver Passive ETF is that any reallocation between gold and silver done by the FOF, will be tax neutral for the investor.