Silver ETF FoFs under pressure: SBI Mutual Fund joins Kotak, UTI in suspending new investments

As per several media reports, the suspension covers all new lump-sum investments, including additional purchases and switch-ins. However, existing investment routes such as Systematic Investment Plans (SIPs), Systematic Transfer Plans (STPs), redemptions, and switch-outs will remain unaffected, in accordance with the existing Scheme Information Document.

The fund house emphasised that the move is temporary and will remain in place until further notice. All other terms and conditions of the scheme remain unchanged.

Which other mutual fund houses have suspended investments in Silver ETF FoFs?

Why are mutual funds suspending Silver ETF FoF investments?

A sharp rally in silver prices and physical supply constraints are driving the mutual fund industry’s recent pause in fresh silver investments.

In 2025, spot silver prices have surged by 73.1% year-to-date, reaching $50.44 per troy ounce, up from $29.14. Domestically, silver prices have seen an even steeper rise on the Multi-Commodity Exchange (MCX), driven by acute scarcity in the physical market.

Kotak Mutual Fund highlighted that the premium for silver in the domestic market rose from 0.51% on September 4 to 5.7% by October 9, significantly widening the gap between global and local prices. This divergence makes it more costly for fund houses to acquire physical silver, leading to higher entry premiums and lower exit realisations for investors.

SBI Mutual Fund stated that the limited availability of physical silver has created challenges in creating new ETF units at the indicative Net Asset Value (iNAV).

What does this mean for investors?

The decision to suspend fresh lump-sum investments is a precautionary measure to protect investors from entering the market at potentially inflated prices. With silver prices continuing to spike and physical supply remaining tight, fund houses are prioritising risk management and fair pricing mechanisms.