What is the current situation with Silver ETF Funds of Funds in India?

Mutual fund houses in India, including Kotak, SBI, and UTI, have temporarily stopped accepting lumpsum investments in their Silver ETF Funds of Funds as of October 2025 due to a sharp surge in domestic silver prices.

Why have these fund houses taken this step?

The domestic price of silver in India is currently trading at a 10-12% premium over international import parity prices, which fund managers believe is an unsustainable and overvalued level. To protect investors from buying silver at these inflated rates, the fund houses have suspended fresh lumpsum investments in their Silver ETF Funds of Funds.

What is the long-term outlook for silver in India?

Despite the recent price surge, industry analysts maintain that silver has strong fundamental tailwinds, particularly due to its role in green energy technologies. They recommend that retail investors allocate 10-15% of their portfolio to gold and silver, but build this exposure gradually through systematic investment plans rather than large one-time purchases.

Home / Business and Economy / Mutual Funds Halt Lumpsum Investments in Silver ETFs Amid Price Surge

Mutual Funds Halt Lumpsum Investments in Silver ETFs Amid Price Surge

14 Oct

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Summary

Kotak, SBI, and UTI MF stop accepting fresh lumpsum investments in Silver ETF FoFs
Domestic silver prices trading at 10-12% premium over international prices
Analysts recommend slow, staggered investments in silver and gold

Mutual Funds Halt Lumpsum Investments in Silver ETFs Amid Price Surge

On October 14, 2025, it was reported that several leading mutual fund houses in India have taken steps to curb fresh lumpsum investments in their Silver ETF Fund of Funds (FoFs) amid the recent surge in metal prices.

According to the news, Kotak, SBI, and UTI Mutual Funds have temporarily stopped accepting large one-time investments in their Silver ETF FoF schemes. This decision comes as the domestic price of silver has been trading at an abnormally high premium compared to international import parity prices, in some cases as much as 10-12% higher.

Analysts explain that the limited availability of physical silver in the Indian market, coupled with a sharp increase in investor demand, has led to this temporary shortage and price distortion. Silver ETFs and their FoFs are forced to purchase the metal at these inflated domestic spot rates due to the inflow of retail money. Fund managers believe this poses the risk of immediate and significant losses for investors if the premium eventually normalizes.