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As many as five mutual fund houses – Kotak Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, Tata Mutual Fund and ICICI Prudential Mutual Fund – have so far temporarily halted new investments in their silver ETF funds of funds (FoFs) amid an unabated surge in silver prices in the domestic market.
Silver rates see massive 54% rise in 6 months
MCX silver is trading at around Rs 1.59 lakh per kg, a massive 64% jump in the last one year and a whopping 54% surge in just 6 months.
Here’s what fund houses have to say on temporary suspension
The fund houses have stated that the decision to temporarily pause subscription was taken in the best interest of investors, as silver prices are currently commanding unusually high premiums in the domestic market.
Kotak Mutual Fund was the first to announce a halt on new lump sum and switch-in investments in its Kotak Silver ETF Fund of Funds.
The fund house said it took this step in “the best interest of investors. Until the premium returns to normal levels, we will not accept lump sum investments. However, SIPs and STPs will continue as before.”
SBI Mutual Fund and UTI Asset Management Company followed suit. They temporarily halted new lump sum investments in their Silver ETF FoFs from October 13th.
SBI MF said that the limited availability of physical silver has made it difficult to create new ETF units, hence this decision was taken.
Tata Mutual Fund too has taken a similar decision, effective October 14, 2025.
The fund house said that “…due to prevailing market conditions and shortage of physical silver in the domestic market, silver is trading at a premium relative to international prices. Therefore, the premium in domestic silver prices directly impacts the valuation of the scheme.”
In light of the current market scenario, Tata Mutual Fund has decided to temporarily suspend all lump sum investments, switch-in into the scheme and fresh registration of Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) into the scheme from the effective date, which is October 14.
Another fun house ICICI Prudential Mutual Fund has also temporarily discontinued subscriptions through lump sum, switch-ins, and systematic transactions in the ICICI Prudential Silver ETF Fund of Fund. The fund house, however, said that its existing SIPs and STPs will operate normally.
What are silver ETFs and silver ETF FoFs?
If an investor wants to invest in silver but doesn’t want the hassle of purchasing and handling physical silver, they have two options — silver ETFs and silver ETF FoFs.
Silver ETFs: These funds invest directly in physical silver and can be traded like shares on stock exchanges. A Demat account is required for this.
Silver ETF FoFs: These funds invest in silver ETFs. Investing in these funds does not require a Demat account, but their expenses are slightly higher than silver ETFs.
So why was there a need to stop investing?
Silver prices have risen significantly this year amid high demand for silver in industries such as solar energy, electric vehicles (EVs), and electronics, combined with a shortage of supply, are the main reasons behind this surge.
Due to this surge, the silver premium (i.e., how much the price of silver in the market is higher than its actual value) in the domestic market has increased significantly. This made buying more expensive and reduced profits on selling, increasing the potential for losses for investors.
Will SIP investors be affected?
No, for now, SIP (Systematic Investment Plan) and STP (Systematic Transfer Plan) investments will continue.
The ban applies only to lump-sum and switch-in investments.
This means that investors who make small monthly investments will not be affected.
What does this mean for investors?
This move by these mutual fund houses is a cautious decision. They don’t want investors to enter the market at very high prices and suffer losses later. As soon as market premiums normalise and supply stabilises, these fund houses may resume lump-sum investments.
What should investors do now?
Experts believe that this is not the right time to enter silver ETFs, as they are trading at a premium. Wait a bit; it’s best to invest when prices cool down or the ETF’s NAV and market value return to balance. Silver’s long-term prospects are still considered strong—but investing at the right time is wise.
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