Mutual Fund Investment 101

Nomination in mutual funds allows you to appoint one or more individuals to receive your mutual fund units or proceeds in the event of your death. Under the latest SEBI rules, nomination is mandatory for single holders (unless they opt out), and investors can add, change, or cancel nominees at any time. 

While most investors focus on how to grow their MF portfolios, they often overlook an important aspect of investing - who will receive those investments in their absence. That’s why it's important to know how to add a nominee to your mutual funds. 

If you haven’t added nominees while starting SIPs, you can still add them later. This guide outlines how to add a nominee to mutual funds in an easy step-by-step way. It also outlines SEBI’s nominee rules so you know exactly what nomination entails and who qualifies.

What is Nomination in Mutual Funds?

Nomination in mutual funds is the process of appointing one or more individuals who will receive the mutual fund units in the event of the investor's death. It helps make the transmission of investments smoother and can reduce the documentation and procedural requirements for the nominee.

SEBI Nominee Rules for Mutual Funds

According to SEBI’s rules, nomination is mandatory for individual account holders unless they opt out of it. 

As per circular SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2026/12676, the following SEBI nominee rules apply for MF folios from 1st September 2026:

How to Add Nominee in Mutual Funds: Online & Offline Steps Explained

1. Online Method:

You can add nominees through the AMC’s website, investment app, or through a registrar (CAMS or KFintech) website. We cover all below:

Through AMC Website or Investment Platform 

Step 1: Log in to the AMC’s website or your investment app using your credentials.

Step 2: Go to the folio management section and select ‘Add/Update Nominee Details’.

Step 3: Select the folio for which you wish to add nominee details.

Step 4: Enter nominee details, including:

• Nominee’s name
• DOB
• Relation to you
• Identification document
• Contact details

Step 5: Specify the percentage of share for each nominee if you are nominating multiple people.

Step 6: Submit the request and verify with the two-factor OTP verification codes sent to your mobile number and email ID.

Some platforms may also provide a digital signature certificate or Aadhaar-based e-signature facility for verification. 

Through RTA Portals

• Step 1: Log in to the RTA portal using your PAN, mobile number, and OTP.
• Step 2: Select the folio for which you wish to add a nominee.
• Step 3: Choose ‘Register Nominee’ and proceed.
• Step 4: Click on ‘Add’ to enter nominee details (same as the ones listed before)
• Step 5: Enter the OTP to confirm your request.
   

2. Offline Method:

You can also complete the mutual fund nomination process offline. Here’s how to add a nominee to mutual funds offline:

Step 1: Download the Mutual Fund Nomination Form from the AMC or RTA website.

Step 2: Fill in details like:

• Folio number
• Nominee name
• Nominee’s date of birth
• Nominee’s relationship with you
• Nominee’s address and contact details

Step 3: Sign the form (names and signatures of 2 witnesses are needed if a thumbprint is used).

Step 4: Submit the form at the nearest AMC branch or RTA office.

How to Update or Change Nominee in Mutual Funds?

Once you know how to add a nominee to mutual funds, it doesn’t mean you cannot change them. You can change mutual fund nominees at any time using the following steps:

• Step 1: Log in to the AMC’s website or your investment platform
• Step 2: Go to the folio management section and click on ‘Add/Update Nominee Details’.
• Step 3: Click the ‘Update/Modify Nominee’ option and fill in the new details.
• Step 4: Verify your action with the OTP.
• Step 5: Submit the request.

For offline nominee modifications, you have to fill and submit the duly signed Mutual Fund Nomination Form at the AMC branch office or RTA service centre. 

SEBI’s Eligibility Rules for Mutual Fund Nominees

Who Can Be a Nominee?

Mutual fund investors can nominate any:

• Individual person, including spouse, parents, kids, family member, friends, etc.
• Minors with the guardian’s details clearly provided.
• NRIs (subject to foreign exchange rules).
• Central/state governments, religion/charitable trusts, or local authorities.
   

Who Cannot Be a Nominee?

Investors can only nominate individuals. This means they cannot nominate the following as per SEBI’s nominee rules:

• Companies
• Partnership firms
• HUFs
• Societies
• Non-charitable trusts

Conclusion

Learning how to add a nominee to mutual funds is important if you’re an individual investor and want your hard-earned money to go to the people you care most about. The online mutual fund nomination process can be completed through the AMC website, your investment app, or the RTA portals. You simply have to:

• Log in and go to the ‘Nomination’ section.
• Select the folio and click ‘Add Nominee’.
• Enter your nominee’s details and the allocation percentage (if you have multiple nominees).
• Verify with the authentication mode given (typically OTP verification)

For the offline route, you need to download the form, fill it up, and submit it to the nearest AMC branch or RTA office. Completing these simple steps can help ensure that your MF investments reach the hands you want them to, even in your absence. 

How to Add a Nominee in Mutual Funds FAQs

1. What is the eligibility criteria for mutual fund nominees?

The chief criterion is that the nominee has to be an individual. It can be a spouse, parent, child, relative, or friend. Minors can also be nominated if guardian details are provided. NRIs may also be nominated, subject to applicable regulations. 

Non-individual entities like institutions or organisations (HUFs, societies, and companies) cannot be nominees. However, religion/charitable trusts are allowed as nominees. 
 

2. Why is nomination in mutual funds important?

Nomination helps simplify the transmission of mutual fund investments after the investor's death. It can make the process of claiming the investments easier for the nominee by reducing procedural requirements.

3. What happens if the mutual fund investor dies without adding nominees?

If no nominee has been registered, the mutual fund units go to the legal heirs of the investor. However, this is not automatic. Legal heirs have to submit various documents to prove their relationship to the investor and others. This makes the process longer and more difficult.
 

4. How many nominees can I list for one folio?

From 1st September 2026, 3 nominees are allowed per mutual fund folio. If you add more than 1 nominee, you should also assign the % share they will receive from the folio.
 

5. Can I register nominees for a minor account?

No. As per SEBI’s rules, if the investment is made in the name of a minor, you cannot register a nominee until the minor becomes an adult.

The retirement planning with mutual funds is the process of investing in mutual fund scheme(s) to create a financial corpus for life after retirement. It may involve making regular investments, selecting suitable funds based on financial goals and risk appetite, and staying invested over the long term.

According to the India Retirement Index Study (IRIS) 5.0, nearly 70% of respondents believed a retirement corpus of ₹1 crore would be sufficient once they retire from work. (Source: Business Standard Report, dated October 30, 2025) 

And why not, at a 6% annual withdrawal, a corpus of ₹1 crore may give about ₹50,000 per month for approximately 20 years. But the question is, how can you achieve this goal? Retirement planning with mutual funds has emerged as one of the most popular ways to build a retirement corpus over the long term. 

According to ICRA Analytics, the Assets under Management (AUM) of retirement mutual funds have surged by more than 226% over the last five years, increasing from ₹9,800 crore in June 2020 to ₹31,973 crore by June 2025. (Source: The Hindu Business Line Report, dated July 28, 2025)

Are you also interested? Read this article to learn how you can do retirement planning with mutual funds and potentially build a retirement corpus of ₹1 crore. 

How Much SIP May Let You Build a Potential ₹1 Crore Retirement Corpus?

The calculation of the required monthly SIP depends on your:

• Expected rate of return 

and 

• The investment horizon

Generally, a higher assumed rate of return or a longer investment period can reduce the monthly investment required. Conversely, lower returns or a shorter time horizon may require a higher SIP amount.

For example, the “15-15-15 rule” of retirement planning suggests that investing ₹15,000 per month for 15 years at 15% p.a. may potentially accumulate a corpus of around ₹1 crore. However, if the actual returns are lower than 15% or the investment period is shorter, the required monthly SIP may be higher.

To understand better, let's check out different investment scenarios (calculated using the Goal SIP Calculator offered by SEBI):

Note: Actual returns, whether positive or negative, may differ from the assumed returns used in the illustrations. The examples below are provided for illustrative purposes only and should not be construed as an assurance or guarantee of future performance

A) When You Prefer Investing for About 15 Years

B) When You Prefer Investing for About 20 Years

How to Retire with ₹1 Crore? Step-By-Step Retirement Planning With Mutual Funds 2026

Firstly, decide your investment horizon and determine how many years remain until retirement. Usually, a longer investment horizon:

• Provides more time for investments to grow through the power of compounding 

and 

• May also reduce the monthly SIP required to work towards the target corpus (as seen in the above calculations).

Once you have identified the required monthly SIP and your approximate investment duration, you may follow these steps:

Step 1: Select Suitable Mutual Funds

Assess your risk tolerance limit and select the “right” mutual fund schemes. The various options available are:

• Equity mutual funds
• Hybrid funds
• Debt funds, or 
• Retirement-oriented mutual fund schemes

As per general industry understanding, investors with a longer time horizon may consider a higher allocation to equity-oriented mutual funds, while those nearing retirement may prefer relatively less volatile investment options. 

Furthermore, instead of relying only on historical or past returns, you may also evaluate additional factors such as investment objective, portfolio quality, return consistency, fund manager experience, and expense ratio.

Step 2: Increase Your SIP Regularly

As income grows over time, you may consider increasing the SIP amount periodically through a “step-up SIP”. For those unaware, a Step-Up SIP allows you to increase your monthly investment at regular intervals, such as annually. 

This approach may potentially reduce the time required to reach the ₹1 crore retirement corpus. Let’s see how through an example:

Example of Step-up SIP

Suppose an investor starts with a monthly SIP of ₹10,000 and earns an assumed return of 12% per annum. By continuing the SIP for 20 years, the investor contributes a total of ₹24 lakh and may accumulate a corpus of approximately around ₹1 crore (illustrative).

Now, assume that the investor opts for an annual Step-Up SIP of ₹1,000. This means the monthly SIP increases from ₹10,000 in the first year to ₹11,000 in the second year, ₹12,000 in the third year, and so on.

In this case,with the same assumed return of 12% per annum, the investor may reach the ₹1 crore milestone in about 17 years, approximately three years earlier than with a fixed SIP.

Step 3: Review + Rebalance Your Portfolio

Retirement planning with mutual funds is an ongoing process rather than a one-time activity. As an investor, you may review the portfolio periodically to ensure it remains aligned with the retirement goal. 

Also, you may prefer rebalancing the asset allocation based on changing financial circumstances, market conditions, and proximity to retirement. Such rebalancing may help you maintain the desired level of risk. 

Step 4: Gradually Reduce Risk Before Retirement

As retirement approaches, you may consider gradually migrating a portion of your portfolio from equity-oriented funds to relatively stable investment options. Such a migration may potentially reduce the impact of short-term market volatility on the retirement corpus just before withdrawals begin.

Step 5: Plan Your Post-Retirement Withdrawals

Building a retirement corpus is only one part of the journey! The next challenge is ensuring that the accumulated wealth lasts throughout retirement. 

To do so, several investors develop their “withdrawal strategy”, following the approach of Systematic Withdrawal Plan (SWP). Under an SWP, a fixed amount is withdrawn from mutual fund investments at regular intervals, such as every month, while the remaining corpus stays invested. 

The potentially “right” withdrawal percentage? It depends on several factors, such as:

• Your age
• Expected expenses
• Life expectancy
• Inflation, and
• The portfolio's potential long-term returns

Note that a lower withdrawal rate may potentially help the corpus last longer, while a higher withdrawal rate could increase the risk of exhausting the corpus comparatively earlier (particularly during prolonged market downturns).

Conclusion

So, now you know what retirement planning with mutual funds is and the various steps you can take to potentially build a retirement corpus of ₹1 crore. If we were to revise, the size of your monthly SIP largely depends on two primary factors: your investment horizon and return expectations. 

A longer investment horizon and higher assumed returns may reduce the monthly SIP, whereas a shorter investment period or lower returns may require a higher monthly SIP to achieve the same goal.

To build a potential ₹1 crore retirement corpus through mutual funds, you may:

• Start investing early to give compounding more time to work.
• Invest through SIPs and increase them periodically with a Step-Up SIP.
• Review and rebalance your portfolio to keep it aligned with your retirement goal.
• Strategically plan your post-retirement withdrawals.

For more information, you can visit www.tatamutualfund.com/deshkarenivesh. The Investor Service Centre of Tata Asset Management Pvt. Ltd. is located at Mulla House, Ground Floor, 51, M.G. Road, Near Flora Fountain, Mumbai – 400 001, Maharashtra. The office hours are Monday to Friday, 9:00 AM to 5:30 PM. For assistance, you can also call (022) 6282 7777 from Monday to Saturday, 9:00 AM to 5:30 PM, or email service@tataamc.com

Retirement Planning with Mutual Fund FAQs

1. Is ₹1 crore enough for retirement?

While it may be sufficient for some investors, others may require a larger corpus. Whether ₹1 crore is enough depends on your:

• Retirement age
• Expected monthly expenses post-retirement
• Lifestyle
• Inflation, and 
• Healthcare costs

2. Which mutual funds are suitable for retirement planning?

There is no single mutual fund that suits every investor. The right choice depends on your age, investment horizon, and risk appetite. 

As per general industry understanding, investors with a longer time horizon usually consider a higher allocation to equity-oriented funds, while those nearing retirement may gradually shift towards relatively less volatile options.

3. Should I withdraw my entire retirement corpus after retiring?

Many retirees prefer withdrawing money “gradually” instead of redeeming the entire corpus at once. You may potentially prefer a Systematic Withdrawal Plan (SWP), which can provide regular cash flows while allowing the remaining investments to stay invested. 

The difference between NSE and BSE is that they are separate stock exchanges with their own benchmark indices, listed companies, and subsidiaries. Besides, they also differ in terms of the products offered and the prices at which the same security may trade on each exchange. 

A stock exchange is a regulated marketplace where financial securities like stocks, bonds, and derivatives are traded. In India, the two major stock exchanges are:

• The National Stock Exchange (NSE) 

and 

• The Bombay Stock Exchange (BSE)

These exchanges help companies raise capital by providing investment opportunities to individuals. Want to know more about them? 

Read this article to learn what the NSE and the BSE are, understand the key differences between them, and find out which exchange may be more suitable for different types of investors. 

What is the National Stock Exchange?

The National Stock Exchange (NSE) is a marketplace where investors, traders, financial institutions, and government entities can buy, sell, and issue a wide range of financial instruments. 

The NSE was founded in 1992 and is currently one of India's largest stock exchanges. Over the years, the NSE has expanded beyond equity trading to include:

• Derivatives
• Debt securities
• Exchange-traded funds (ETFs)
• Mutual funds, and
• Other investment products.
   

In Fiscal 2026, NSE was the largest multi-asset class exchange in terms of the number of trades in cash equities and contracts traded in equity derivatives. (Source: NSE India)

As of 2026, its offerings can be grouped into the following three broad asset classes: 

(Source: NSE India - Products and Services)

Additionally, the NSE also operates several subsidiaries and specialised platforms that serve different parts of the financial market. Let’s check them out (illustrative list):

(Source: NSE India - Group Companies)

What is the Bombay Stock Exchange?

The Bombay Stock Exchange (BSE) is the oldest in Asia, established in 1875. It provides a regulated platform where:

• Companies can raise funds 

and

• Investors can buy and sell securities

BSE also has one of the highest numbers of listed companies among stock exchanges worldwide. (Source: BSE India) 

Just like NSE, the BSE also offers trading across multiple asset classes, including equities, debt securities, derivatives, mutual funds, and other financial products.  Besides, BSE also operates the following specialised platforms (illustrative list):

(Source: BSE India)

What is the Difference Between the NSE and the BSE?

The NSE and the BSE are the two major stock exchanges in India. Both are regulated by the Securities and Exchange Board of India (SEBI) and provide a platform where investors can buy and sell securities. 

Although they perform similar functions, the two exchanges differ in their history, benchmark indices, trading activity, and product offerings. To better understand the difference between NSE and BSE, study this detailed comparative analysis:

NSE vs BSE: Which Exchange is Better for Investors?

After learning the difference between NSE and BSE, it's now time to understand which exchange is better. Realise that there is no universal answer to this question. 

Both exchanges are:

• Regulated by SEBI
• Follow the same regulatory framework, and
• Provide access to many of the same listed companies

Still, if you want to make a choice between NSE and BSE, it may depend on the security being traded, trading activity, and the price available on each exchange at the time of placing an order. 

Let’s understand these factors in detail:

Conclusion

So, now you know what the NSE and the BSE are, how they differ, and which exchange may be suitable for different investing situations. To revise, both NSE and BSE are India's major stock exchanges and are regulated by the SEBI. 

They serve a wide range of market participants, including retail investors, institutional investors, companies, government entities, and other financial institutions. 

Which exchange is better? The potentially “right” choice between them may depend on the following factors:

• The Security Traded: Some securities are listed only on one exchange.
• Trading Activity: Higher trading volumes may offer better liquidity for certain securities.
• The Quoted Price: The same security may trade at different prices on NSE and BSE at a given time.

For more information, you can visit www.tatamutualfund.com/deshkarenivesh. The Investor Service Centre of Tata Asset Management Pvt. Ltd. is located at Mulla House, Ground Floor, 51, M.G. Road, Near Flora Fountain, Mumbai – 400 001, Maharashtra. The office hours are Monday to Friday, 9:00 AM to 5:30 PM. For assistance, you can also call (022) 6282 7777 from Monday to Saturday, 9:00 AM to 5:30 PM, or email service@tataamc.com

Difference Between NSE and BSE FAQs

1. What are the NSE and BSE full forms?

The NSE full form is “National Stock Exchange”, and the BSE full form is “Bombay Stock Exchange”.

2. What is the difference between Nifty and Sensex? 

The Nifty vs Sensex difference primarily lies in the stock exchange they represent and the number of companies they track. Nifty 50 is the benchmark index of the NSE and comprises the 50 largest listed companies in terms of full market capitalisation. 

In contrast, the Sensex is the benchmark index of the BSE. It tracks the performance of the 30 largest companies listed on the BSE in terms of full market capitalisation.

3. NSE vs BSE for ETF investors: Which exchange should you choose?

If an Exchange Traded Fund (ETF) is listed on both NSE and BSE, investors may compare these factors before placing an order:

• The ETF's trading volume/ activity
• Bid-ask spread, and
• The quoted price on each exchange 

As per general market understanding, ETFs with higher trading activity may offer better liquidity. Also, if an ETF is listed only on one exchange, investors may need to buy or sell it through that exchange.

The AUM in mutual funds is the total market value of all the assets managed by a mutual fund scheme. It fluctuates daily based on the prevailing NAV and outstanding units.
 

The AUM full form is “Assets Under Management”. It is one of the most commonly used parameters to evaluate mutual fund schemes. By analysing AUM, an investor can gain insights into a fund’s size, popularity, and the ability to manage large capital. 
 

Want to learn more? Read this article to first understand the AUM meaning and then see how it is calculated (with the help of an example). Lastly, know how AUM can influence your mutual fund investments. 

What Do You Mean by AUM in Mutual Funds?

AUM is the total market value of all the money invested in a mutual fund. This includes the value of every stock, bond, cash holding, and other securities that the fund owns on behalf of its investors.
 

When people invest in a mutual fund, their money is pooled together and managed by a professional fund manager. The combined value of these investments is known as the fund's Assets Under Management (AUM).
 

Note that the value of a mutual fund's AUM is not fixed. It changes every day due to fluctuations in the market prices of the underlying investment and regular additions or withdrawals by investors from the fund.

How to Calculate AUM of Mutual Funds Schemes?

AUM can be calculated using the following formula:

• AUM = Current NAV × Total Number of Outstanding Units
   

For those unaware, Net Asset Value (NAV) is the price of one unit of a mutual fund schemes. It is calculated at the end of each trading day based on the current value of the fund's assets after deducting its liabilities. Whereas, the “total outstanding units” are the number of units currently held by investors.

When you multiply the current NAV of a mutual fund scheme by its total number of outstanding units, you get the AUM of that particular day. For more clarity, let’s study an example. 
 

Example of AUM of Mutual Fund Schemes 

Suppose the NAV of a mutual fund scheme at the end of July 6, 2026, is ₹50 per unit. The total outstanding units are 20 lakhs. Now, the AUM is:

• AUM =₹50 per unit × 20,00,000 units 
• AUM =₹10,00,00,000 or ₹10 crores 

How Does AUM Influence Your Mutual Fund Investments?

Firstly, realise that AUM only shows the size of a mutual fund scheme. As per general industry understanding, a larger AUM means the fund manages more investor money, while a smaller AUM shows it manages less.

At this time, it is worth mentioning that AUM does not indicate whether the fund delivers better returns or is a better investment opportunity than other funds. However, it may potentially influence some other aspects, such as liquidity offered, the level of diversification, and the expense ratio charged. 
 

Let’s understand in detail:

1. Liquidity

A fund with a larger AUM may have more money invested across different securities. This might make it easier for the fund to meet investor redemption requests. 

However, liquidity also depends on the type of assets the fund holds. For example, a fund that invests in large-cap stocks generally has better liquidity than one that invests in small-cap stocks.
 

2. Diversification

As per general market understanding, funds with a higher AUM may have a comparatively greater ability to diversify and spread investments across a larger number of stocks, bonds, or other securities depending upon the scheme category. 
 

3. Expense Ratio

A mutual fund scheme with a larger AUM may charge a comparatively lower expense ratio. This is because many of the fund's operating expenses (such as administrative costs or fund management fees) are spread across a larger pool of assets. 

As the total assets managed by the fund increase, the cost per investor may fall. This can allow the scheme to offer a lower expense ratio.

Should You Choose a Mutual Fund Scheme Based on AUM?

AUM could be one factor in your evaluation. However, it should not be analysed in isolation. Realise that a larger AUM does not guarantee higher returns, and a lower AUM does not mean a fund will perform poorly.
 

Therefore, before investing, investors may consider AUM along with the following factors (illustrative list):

• The fund’s investment objective
• Portfolio quality
• Historical performance across market cycles
• Risk level
• Expense ratio, and
• The fund manager's experience
   

Looking at these factors together may give you a more balanced view of the fund.

Conclusion

So, now you know about AUM in mutual funds, how it is calculated, and how it can influence your investments. To revise, AUM represents the total value of assets managed by a mutual fund scheme. It is calculated by multiplying the current NAV by the total outstanding units of the scheme.
 

Note that a fund's AUM does not indicate its performance or return potential, but can influence certain other aspects. Potentially, a larger AUM may:

• Support better liquidity
• Lead to broader diversification
• Allow the fund to charge a lower expense ratio
   

Therefore, AUM is a useful metric to consider, but it may be evaluated alongside other important factors, such as a fund’s historical performance, portfolio quality, risk level, and more.
 

For more information, you can visit www.tatamutualfund.com/deshkarenivesh. The Investor Service Centre of Tata Asset Management Pvt. Ltd. is located at Mulla House, Ground Floor, 51, M.G. Road, Near Flora Fountain, Mumbai – 400 001, Maharashtra. The office hours are Monday to Friday, 9:00 AM to 5:30 PM. For assistance, you can also call (022) 6282 7777 from Monday to Saturday, 9:00 AM to 5:30 PM, or email service@tataamc.com

AUM in Mutual Funds FAQs

1. What is the relationship between AUM and fund performance?

As per general market understanding, there is no direct relationship between a mutual fund's AUM and its performance. In most cases, a larger AUM does not guarantee higher returns, and a smaller AUM does not mean weaker performance. 

Note that returns primarily depend on the:

• Fund manager's investment decisions
• Portfolio quality
• Prevailing market conditions, and
• The fund's investment strategy
   

2. Why does the AUM of a mutual fund change every day?

A mutual fund's AUM changes because the value of its underlying investments fluctuates with market conditions. Besides, it also changes when investors purchase new units or redeem their existing units. 

Realise that due to both the above factors, the total assets managed by the fund are recalculated at the end of each trading day.

• Silver ETFs invest in 99.9% purity silver and track the domestic price of silver.

• Global push for green energy, solar panels, and EVs has increased the industrial demand for silver.

• The supply of silver remains limited as it is produced as a mining by-product. 

• With demand consistently exceeding silver supply, silver ETF performance and returns are likely to benefit. 

Over the last year, silver offered gains of around 160%, outshining gold’s returns of about 80% domestically in 2025 
(Source: Economic Times). 

Much of this growth was due to the rising industrial demand for silver in the green energy market -particularly for EVs and solar panels. In this article, we assess how this green energy boom has impacted silver ETF performance and what it means for investors. 
 

What are Silver ETFs?

A silver exchange-traded fund is a type of fund that pools money from multiple investors to invest in physical silver and track its spot price (subject to tracking errors). The silver ETF buys physical silver of 99.9% purity and stores it with a custodian bank as per SEBI requirement.

Investors benefit because they gain exposure to silver without actually physically holding or storing the asset. You can buy and sell silver ETFs like regular shares on the stock exchange. Silver ETF returns depend on the price of silver in the domestic market, which is a result of several factors, including the green wave. 
 

How is the Green Energy Boom Driving Silver Prices?

Silver is one of the most crucial elements in leading the green energy boom. The white metal has electrical conductivity properties that make it irreplaceable in modern green technologies. Among the various green energy techs using silver, solar and EV are the two most prominent ones: 

1. Role of Solar Energy Demand

The thin metallic lines visible on the surface of a solar panel are made using a special silver paste. This paste carries the electricity produced by the cell to the external circuit, allowing the solar panel to deliver usable power efficiently.

Silver is used in solar panels due to its three important properties:

• Very high electrical conductivity.

• Excellent thermal conductivity.

• High resistance to corrosion.

According to recent data, solar PV manufacturing is now one of the fastest-growing sources of silver demand (Source: United States Gold Bureau). Some key trends that highlight this growth include:

• Silver demand for solar panels went up from 11% in 2014 to 29% in 2024 
  (Source:  The Silver Institute)

• A study published in the Resources, Conservation, and Recycling journal states that the solar industry alone would need 321 to 450 million ounces of silver by 2030. 

• India also aims to achieve 280 GW of solar power by 2030 to meet its renewable energy goals (Source: IBEF), supported by government initiatives like the PM Surya Ghar: Muft Bijli Yojana.

So, as countries expand clean energy capacity and pursue net-zero goals, solar-related silver demand is expected to remain strong. 
 

2. Rising EV Demand

Silver is also one of the important metal in the electric vehicle (EV) ecosystem. It is used in batteries, charging systems, power electronics, switches, and various electrical connections because of its excellent conductivity.

A few factors are driving silver demand from this segment:

• Battery electric vehicles use significantly more silver than conventional petrol or diesel vehicles.

• On average, EVs contain around 67-79% more silver per vehicle due to their higher dependence on electronics and power management systems 
  (Source: The Silver Institute).

• Silver consumption from the automotive sector is expected to rise from around 80 million ounces in 2026 to about 94 million ounces by 2031 
  (Source: Economic Times).

With countries encouraging cleaner transportation options and aiming to reduce dependence on fossil fuels due to rising geopolitical tensions, the industrial demand for silver for EVs is likely to continue growing. 
 

Understanding the Supply vs. Demand Dynamics for Silver

Apart from high green energy demand in solar and EVs, the rising price of silver is also due to a structural supply squeeze. Just like any commodity, when demand exceeds supply, silver prices also rise. 

Now, silver’s supply restrictions are primarily twofold:

• A significant part of silver demand is industrial, which means the silver is permanently consumed and does not circulate back into the system.

• About 70% of silver is actually produced as a by-product of copper, zinc, and lead mining. This is why silver production cannot be scaled up to meet higher demand, leading to a supply shortage.

   

How Does the Growing Green Energy Demand Impact Silver ETF Performance?

As mentioned earlier, silver ETFs track the market price of silver. So when the price of silver rises due to high green energy demand and limited supply, silver ETF performance may also benefit:

Higher EV and solar energy demand + limited silver supply → Rise in silver spot price → Potential rise in silver ETF returns

Therefore, if you are buying silver ETFs, you should keep these key return drivers in mind. 
 

Looking Beyond Green Drivers: What You Should Understand About Silver ETF Returns

While the green energy wave is an important factor driving the industrial demand for silver, silver ETF performance are not driven by a single trend. So before you decide to buy silver ETFs, here are a few key points you should note about silver ETF performance:

• Silver ETF performance are not driven only by green energy demand. Silver is both a precious metal and an industrial metal. This means prices can also be influenced by factors such as manufacturing activity, electronics demand, central bank interest-rate decisions, and defensive buying during periods of economic uncertainty. 

• Silver ETFs may sometimes trade at a premium to their NAV: This means the market price of a silver ETF can temporarily be higher than the value of the silver it holds due to strong investor demand and low supply. This may happen due to import delays, higher festive demand, and supply chain bottlenecks. 

• Silver prices can be more volatile than gold: Since silver is both a precious metal and an industrial commodity, its prices can fluctuate more sharply depending on changes in economic activity, industrial demand, and investor sentiment. 

Understanding these factors can help you set realistic expectations while investing in silver ETFs.
 

Considering Silver ETFs and Silver ETF FoFs? Here Are a Few Options Offered By Tata Mutual Fund

If you’re looking for investing in silver, there are two primary ways to do it:

• Through silver ETFs directly 

• Through a silver ETF fund of funds

Tata Mutual Fund offers both these options:

1. Tata Silver ETF

   The Tata Silver ETF scheme allows you to invest in silver ETFs directly. Here are all the key details of the scheme:
    

2. Tata Silver ETF Fund of Fund 

If you wish to gain exposure to the white metal through a silver mutual fund, you may consider the Tata Silver ETF Fund of Fund. Here are the key details on this silver ETF fund of funds scheme:
 

Conclusion

The green wave of rising solar panels and EV demand has acted as a one of the major tailwind for silver prices. This, coupled with a limited supply of silver and growing manufacturing demand in other sectors, has impacted silver ETF performance.

While these factors may be a key driver of silver ETF performance, there are still other key elements like geopolitical stability, currency, and governance policies like customs and tariffs that can impact silver ETF prices and thereby it’s performance. 

As an investor, you should understand that silver ETF returns tend to be potentially more volatile and take cautious investment decisions that suit your investment goals and risk tolerance. 
 

FAQs

1. Are silver ETF returns more volatile than gold ETFs?

   Yes. Silver ETF returns can be more volatile than gold because silver has a dual role. It is valued as a precious metal, but it is also widely used in industries such as solar energy, electric vehicles, and electronics. As a result, changes in industrial demand, investor sentiment, and the limited supply of silver can lead to sharp price movements and fluctuations in returns. 
    

2. Can I invest in silver ETFs through SIPs?

   While direct SIP investments in silver ETFs is not allowed, some platforms may allow investors to follow a SIP-like investment approach through stock SIPs. If you don’t want to open a Demat account and start silver SIPs, you can also choose to invest in a silver ETF fund of funds through your existing mutual fund account.
    

3. Can silver prices continue to benefit from the green energy transition?

   The growing use of silver in solar panels and electric vehicles is expected to support long-term industrial demand. However, silver prices will also depend on factors such as supply, global economic conditions, and investor sentiment. Therefore, silver ETF prices and returns are not guaranteed and cannot be predicted.