NFO Pick – (Mirae Asset Gold Silver Passive FOF)

18 Aug 2025 , 09:36 AM

WHY A GOLD SILVER COMBINATION FOF

Investing in a combination of gold and silver FOF gives some distinct advantages to the investors. Here are a few key merits.

• It gives the best of both worlds. Gold offers a defence against macro stress while silver offers upside in reflation times or during an industrial-led rally.
• While gold has short tails, silver has long tails and hence it is tough to time both these metals accurately. A better bet is an FOF that adopts an allocation approach.
• The reallocation between gold and silver is managed with a professional touch; focusing on global trends, global macros, and macro overlays for a higher success chance.
• Dynamic allocation between gold and silver becomes more tax efficient in the FOF structure, as compared to individuals doing it in the DIY model.
• The base exposure to gold and silver is maintained at all times, with only the relative percentages tweaked for additional alpha.

Let us look at how the FOF structure scores over the DIY structure.

HOW THE FUND OF FUNDS MODEL SCORES FOR INVESTORS

Here are some key reasons why the FOF model scores over the DIY model for investors.

• In a DIY reallocation between gold and silver, there is capital gains tax payable on each action point. However, in the FOF model, reallocations by the fund are tax-free and the capital gains tax is only payable at redemption.
• This has a substantial impact on the total tax payout. If you compare a simulated gold and silver FOF with DIY approach, the savings in tax over a 20 year period can be close to 60% as per empirical data. That is substantial.
• Due to lower tax drag at each stage, the reinvestment is also larger and hence the impact on the final YTM is also much bigger. This more than makes up for the small cost that investors have to incur as TER charges.

The tax efficiency is a key factor in making the FOF approach to gold and silver more attractive. Apart from portfolio risk diversification, it also offers tax efficiency.

GLANCE AT THE MIRAE ASSET GOLD SILVER PASSIVE FOF NFO

Here are key details of the Mirae Asset Gold Silver Passive FOF NFO.

• NFO opened on August 11, 2025 and closes on August 25, 2025. It is an open ended Fund of Funds (FOF) scheme investing in a combination of Mirae Gold ETF and Mirae Silver ETF; combining active allocation and tax efficiency.
• On the risk-o-meter, Mirae Asset Gold Silver Passive FOF is classified as “Very High Risk,” due to its predominant exposure to gold and silver. The fund value is vulnerable to the price movement and the drawdowns of gold and silver.
• The Mirae Asset Gold Silver Passive FOF is best suited to investors looking at precious metals as an asset class to diversify their portfolio. The FOF structure also tends to be more tax efficient compared to the traditional DIY allocation to gold and silver.
• The benchmark for the fund will be 50% (Gold Price) + 50% (Silver Price). Ritesh Patel will be the specialized fund manager and will handle the allocation ratios for the gold and silver ETFs of Mirae, so as to keep tracking error at the bare minimum.
• Minimum application amount in NFO is ₹5,000 and multiples of ₹1 thereof. The minimum allocation to SIPs in the post NFO period, will be ₹99 and in multiples of ₹1 thereafter. SIPs can provide the added advantage of rupee cost averaging.
• There will be an exit load of 0.05% of applicable NAV, if redeemed within 15 days from the date of allotment of units. There will be no exit load after that. However, it is advisable to have a 5-7 years holding perspective for best benefits of the FOF.

Mirae Asset Gold Silver Passive FOF will be classified as non-equity fund for tax purposes. Hence, LTCG will be taxed at 12.5% (if held for over 24 months). STCG (held for under 24 months) will be taxed as per the incremental slab applicable to the investor. However, the real benefit of the FOF will come from the tax-free asset reallocation that the MF enjoys.