Three Mutual Fund Houses Halt Investment In Silver ETF FoFs - Know Why

Silver prices have witnessed a dramatic increase in 2025. Investors are also on the lookout for ways to make the most of the momentum seen in the commodity market.

However, amid this stark rise in silver prices, three mutual fund houses have stopped accepting fresh lump sums and switched to investments in exchange-traded funds of precious metals within the span of two days.

Which Mutual Fund Houses Have Stopped Fresh Investment In Silver

As of October 12, 2025, Kotak Mutual Fund, SBI Mutual Fund and UTI Asset Management Company have halted fresh investment into silver ETFs. On October 10, Kotak Mutual Fund said in a release that it is halting fresh lump sum/switch-in investments into the Kotak Silver ETF Fund of Fund.

The mutual fund house added that it will resume lump sum/switch-in subscriptions once the premium normalises. The fund house added that investment via the systematic investment plan route will continue despite the halt in lump sum transactions.

“In the best interest of our investors, we are implementing the following measures effective October 10 2025. Lump sum/Switch-in investments in Kotak Silver ETF Fund of Fund will be temporarily suspended. We will resume lump sum/switch-in subscriptions once the premium normalises to acceptable levels. SIP (Systematic Investment Plan) / STP (Systematic Transfer Plan) investments will continue uninterrupted,” the release said.

Following the notice by Kotak Mutual Fund, SBI Mutual Fund and UTI Asset Management Company also released statements halting investments in silver ETFs on October 11.

“SBI Mutual Fund Trustee Company Private Limited, Trustees of SBI Mutual Fund, has decided to temporarily suspend all fresh subscriptions through lump sum investment (including additional purchases / Switch-in) in SBI Silver ETF Fund of Fund (FoF) w.e.f October 13, 2025. All existing /New Systematic Investment Plan (SIP), Systematic Transfer Plan (STP), etc., offered by the Scheme will remain operational,” SBI Mutual Fund said.

Why Have Mutual Fund Houses Stopped Investments In Silver ETFs

The rise in silver prices seen in 2025 has been drastic. Spot silver has climbed 73.1 per cent year-to-date to $50.44 per troy ounce up by nearly $21.3.

On the other hand, domestic silver prices have witnessed an even steeper uptick on the Multi-Commodity Exchange (MCX) and due to acute scarcity of the precious metal in the physical market.

According to Kotak Mutual Fund this gap has widened significantly in the past few sessions. The premium with which silver has traded in the domestic market has increased from 0.51 per cent on September 4 to 5.7 per cent on October 9. This difference ultimately results in a higher buying premium and a lower selling premium for the fund house.

SBI Mutual Fund added that the limited availability of physical silver has led to difficulties for the fund house in creating new units by the ETFs at the indicative NAV. As per Kotak Mutual Fund, the shortage of silver is expected to persist throughout October.

“Investors are requested to note that, in recent weeks, silver has witnessed a sharp surge in demand, driven by global macroeconomic factors and increased investor interest in commodities. However, the current limited availability of physical silver has put a constraint

On the creation of new units by the ETFs at the indicative NAV (iNAV),” SBI Mutual Fund said in a release. To conclude the decision by the fund-houses to halt lumpsum investments is centred at protecting investors from taking an entry market at potentially inflated prices.

Typically investing at a high premium means paying more than the actual worth of the underlying silver for investors, which could ultimately lead to losses if the premium normalises.