Silver Mutual Funds in India: Best Funds, Returns & SIP Guide (2026)

In India, silver mutual funds are Fund of Funds (FoFs) that invest in a silver ETF. This lets investors track the price of silver without having to open a demat account or store physical silver. In 2025 and 2026, a lot of money came into this category. This was made easier by the fact that, according to the Silver Institute's World Silver Survey, the global silver market is on track for its sixth straight year of supply deficit in 2026.

This article ranks the best silver ETF FoFs in India based on their returns, expense ratios, and minimum SIP. It also explains how to begin a SIP without a demat account and lists the current capital gains tax rules that apply to investments in silver funds.

In India, a silver mutual fund is usually set up as a two-layer Fund of Funds. A silver exchange-traded fund (ETF) holds real silver and trades on the stock exchange. It is at the base. On top of it is the silver FoF, which is a normal mutual fund that pools investor money and puts almost all of it into units of the silver ETF. The investor doesn't actually hold the ETF or the metal; instead, they hold units of the FoF. The FoF holds units of the ETF, which holds the silver.

This structure exists specifically to remove the biggest barrier to ETF investing: the demat account. You can buy and sell a silver FoF just like any other mutual fund. You can do it through a fund house's website or app, or through a distributor platform. All you need is a PAN, a bank account, and KYC. You don't need a trading account or a broker.

Investors put money into the Silver FoF, which then buys units in the Silver ETF. The Silver ETF then holds physical silver bullion, and the value of the investor's FoF units goes up and down with the price of silver in the United States, taking into account the costs at each level. A direct silver ETF skips the top layer entirely, but requires a demat account and real-time trading through a broker.

A silver ETF and a silver FoF ultimately track the same underlying asset, but the route to owning them looks quite different for an everyday investor. The table below lines up the five factors that matter most when choosing between the two.

The practical difference comes down to access versus cost. An ETF is generally cheaper to hold over the long run since it avoids the second expense layer, and it can be bought or sold within seconds during market hours. A FoF costs slightly more each year but removes the need for a demat account, a broker, and any familiarity with placing exchange orders — the entire investment happens through the same interface used for any other mutual fund SIP. In short, a silver FoF suits SIP investors who want silver exposure without opening a demat account, while a direct silver ETF suits active traders who already hold a demat account and want to avoid the second layer of cost.

Because every silver FoF ultimately tracks the same domestic silver price through its underlying ETF, choosing between them is less about picking a “winner” on returns and more about comparing scale, cost, and how long a fund has been running. Three factors are worth checking before shortlisting a fund: AUM (a larger fund generally means deeper liquidity and steadier tracking during periods of heavy inflows or outflows), the length of track record (a fund needs a full three years of history before its 3Y CAGR figure means very much), and the minimum SIP amount, which varies more than investors expect across otherwise similar funds.

The table below compares the seven largest silver ETF FoFs available in India (Direct Growth plans), using data reported as of early August 2026. Because NAVs move with the daily silver price, these figures — especially returns and AUM — will have shifted by the time you read this; treat them as a snapshot for comparison, not as current figures, and check the fund house's factsheet before investing.

One-year returns across established funds cluster tightly in the high-80s to low-90s percentage range, because every FoF tracks the same underlying domestic silver price through its respective ETF — the fund itself does not decide how silver performs. This means expense ratio and AUM, not returns, are the practical differentiators once a fund has a track record. A larger AUM generally signals more consistent tracking and lower liquidity risk during redemption, since the underlying ETF can absorb inflows and outflows more smoothly without the FoF needing to hold excess cash as a buffer. Funds launched after 2023, such as the SBI Silver ETF FoF, do not yet have a full three-year CAGR to compare, so their one-year number carries more weight in an initial assessment but tells you less about how the fund behaves across a full market cycle, including periods when silver prices fall rather than rise. Among the established options with a three-year track record, the Aditya Birla Sun Life Silver ETF FoF has delivered a 3Y CAGR of roughly 41%, broadly in line with peers of similar vintage, while carrying the standard two-layer FoF cost structure common to the category.

A related point that the table alone won't show: several fund houses, including Kotak, SBI, UTI, Axis, and Tata, briefly paused new lump-sum and switch-in investments into their silver FoFs in October 2025, after domestic silver traded at a steep premium to international prices amid a physical supply crunch. All of them resumed normal subscriptions within roughly two weeks once the premium eased, and existing SIPs continued running throughout, but the episode is a useful reminder that a silver FoF's AUM and accessibility can be affected by conditions in the physical bullion market, not just by investor demand for the fund itself.

Worth flagging separately: expense ratios for silver FoFs are not static. Fund houses periodically revise TERs, and the gap between a fund's regular plan (bought through a distributor, who earns a trail commission built into the TER) and its direct plan (bought straight from the AMC, with no distributor commission) can run to several tenths of a percentage point — meaningful over a multi-year SIP. Investors comparing funds purely on the headline AUM or 1Y return figure risk missing this distinction, since two funds with near-identical returns can still leave an investor paying a noticeably different total cost depending on which plan they choose.

Every silver FoF investor pays two expense ratios stacked on top of each other: the FoF's own Total Expense Ratio (TER), which typically runs from about 0.09% to 0.6% per year depending on the fund and plan, plus the underlying silver ETF's TER, typically in the 0.2%–0.5% range. As a worked example, if the FoF's TER is 0.20% and the underlying ETF's TER is 0.25%, the investor's effective total annual cost is approximately 0.45% — even though only one of those numbers appears prominently on the FoF's own factsheet. A direct silver ETF investor, by contrast, pays only the single ETF-level TER, since there is no FoF layer sitting on top. For an SIP investor without a demat account, that extra TER layer is effectively the price of convenience — access to silver through a familiar mutual fund SIP process, without needing a trading account, in exchange for a modestly higher recurring cost that compounds over a long holding period.

Also Read: Best Silver ETF India 2026: Complete Guide to Top Funds, Returns & How to Invest

Starting an SIP in a silver ETF FoF follows the same process as any other mutual fund SIP, and needs no demat account or stockbroker at any stage.

1. Complete KYC online: If you are not already KYC-verified for mutual funds, this can be done digitally using your PAN and Aadhaar-based eKYC, typically in a few minutes on the fund house's or a distributor platform's app or website.
2. Choose a silver ETF FoF: Select a fund directly through an asset management company's own platform or through a mutual fund distributor app, comparing options using the returns and cost data above.
3. Set your SIP amount: Minimum SIP amounts range from ₹100 to ₹500 a month depending on the fund, so you can start small and scale up later.
4. Select your SIP date and frequency: Most platforms offer monthly SIPs with a choice of debit date; some also allow weekly or quarterly frequency.
5. Link your bank account for auto-debit: Once linked via NACH mandate or UPI Autopay, the SIP runs automatically each cycle without manual intervention.

Because silver prices move sharply over short periods, an SIP uses rupee-cost averaging to smooth out entry points — you buy more units when the NAV is low and fewer when it is high, rather than committing a lump sum at a single price point. One practical detail worth noting before you start: most silver FoFs charge an exit load, typically around 1% of the redemption value, if units are sold within 15 days of purchase, so this is not a product meant for very short holding periods regardless of the SIP structure.

These figures, drawn from fund and index data as of late July/early August 2026, illustrate a pattern rather than a permanent ranking: silver has sharply outpaced both gold and Indian equities over the past one and three years, while the Nifty 50 has been close to flat over the trailing year. Silver's price can swing considerably faster than gold's in both directions, since it responds to industrial demand cycles (solar panels, electric vehicles, electronics) as well as the safe-haven, monetary-metal demand that also drives gold, giving silver two separate and sometimes conflicting demand drivers. Equities, by contrast, are driven by earnings growth, interest rates and broader macro sentiment, and a weak one-year equity return like the one shown above is a reminder that different asset classes take turns leading and lagging — which is itself an argument for holding more than one of them.

The sixth consecutive year of a global silver supply deficit, as reported by the Silver Institute, is a structural factor supporting the metal's price over time, but a structural tailwind is not the same as a smooth or guaranteed one; the same report shows the deficit widening even as overall demand softens, which points to continued price sensitivity rather than steady, predictable gains. For this reason, most analysts frame silver as a satellite allocation of roughly 5–10% of a diversified portfolio rather than a core holding, consistent with a broader guideline of capping total commodity exposure at around 20% of a portfolio. Treating a strong recent run as a reason to overweight silver well beyond that range would concentrate a portfolio in one of its more volatile components, right after the period when that volatility has been most visible.

Silver FoFs tend to suit three types of investors. Diversifiers — those whose portfolios lean heavily on equity and fixed income — can use a silver FoF to add commodity exposure without the hassle of buying, storing, or insuring physical silver. SIP starters can build a silver position gradually, starting with as little as ₹100 a month, which keeps the initial commitment low while still establishing exposure to the asset class. Macro-theme investors who want exposure to the industrial demand story behind silver — its growing use in electric vehicles, solar panels, and 5G infrastructure — can access that theme through a regulated, liquid fund rather than physical metal or single-stock bets on silver miners.

Silver mutual funds are less suited to a couple of situations. Investors with a short time horizon, under about two years, take on outsized risk given how sharply silver prices can move within a single year. Investors who need predictable, guaranteed returns — for a near-term goal like a down payment or tuition due within the next year or two — should look at fixed-income instruments instead, since a silver FoF offers no principal protection or return guarantee of any kind. Neither of these groups is doing anything wrong by avoiding silver; it is simply a product built for a longer horizon and a higher risk tolerance than either group typically has room for.

Silver ETF FoFs are classified as non-equity (specified mutual fund) schemes for income tax purposes, since they hold no equity exposure. Gains on units held for 24 months or less are treated as short-term capital gains, added to the investor's total taxable income, and taxed at their applicable income tax slab rate. Gains on units held for more than 24 months are treated as long-term capital gains and taxed at a flat 12.5%, without the benefit of indexation — a rule that took effect following the Finance Act 2024 changes to capital gains taxation. For SIP investments specifically, each monthly instalment is treated as a separate purchase with its own holding period, and units are assessed for tax purposes on a first-in-first-out (FIFO) basis when redeemed, meaning the earliest-purchased units are considered sold first.

Investors who opt for the IDCW (dividend) option instead of growth should note that any payout received is taxed as income at their slab rate in the year it is paid, regardless of how long the underlying units have been held — which is one reason most long-term silver FoF investors default to the growth option instead. It's also worth remembering that this 24-month/12.5% framework applies specifically to silver ETF FoF units bought through a mutual fund; physical silver, silver jewellery, and directly held silver ETF units can follow different holding-period and computation rules. For a full walkthrough of silver taxation, including rules for physical silver and jewellery, refer to the brand's dedicated guide on silver-selling tax rules.

• Price volatility. Silver prices can move two to three times more sharply than gold in both directions over comparable periods, which means both gains and drawdowns can be larger and faster than investors used to gold or equity funds might expect.
• Tracking error. A silver FoF's NAV may not perfectly mirror the domestic silver spot price, since it passes through two layers of cost and periodic rebalancing between the FoF and the underlying ETF. During periods of acute physical silver shortage, several fund houses have briefly paused new lump-sum investments in their silver FoFs to protect investors from buying in at an inflated premium over international prices — a real illustration of how supply-side stress in the physical market can show up as a liquidity constraint at the fund level, even though existing SIPs typically continue uninterrupted during such episodes.
• Currency risk. Silver is priced globally in US dollars, so a weaker rupee can amplify rupee-denominated returns while a stronger rupee can dampen them, independent of what silver itself does in dollar terms.
• Concentration risk. A silver FoF holds a single commodity. If silver and equities fall together in a broad risk-off event, the diversification benefit an investor is counting on may not show up exactly when it is needed most.

Also Read: Silver ETF vs Gold ETF: Returns, Risk and Key Differences

Silver mutual funds are a convenient way to diversify your investment in the precious metal, particularly for investors who want to invest through an SIP without a demat account. If you are looking for further flexibility and ease, digital silver is another option to consider. Explore investments in Digital Silver with Aditya Birla Capital. You can invest in 999.9+ pure silver, that is stored securely in insured vaults. You can also redeem it physically within mandated minimum quantities, or sell digitally, subject to applicable terms and conditions.