ICICI Prudential Suspends Silver ETF FoF Subscriptions Amid Rising Silver Premiums

ICICI Prudential Mutual Fund has stopped accepting new investments in its Silver ETF Fund of Fund (FoF) from October 14, 2025, citing sharp price distortions in the silver market. The move comes after SBI, Kotak, and UTI Mutual Funds took similar action earlier this month due to inflated silver premiums and a shortage of physical supply.

Existing SIPs and STPs will continue as usual, but new lump-sum, switch-ins, or systematic transactions are temporarily suspended.

Why Fund Houses Are Taking This Step

Domestic silver prices have surged well above global levels because of limited availability of physical silver. Typically, market makers purchase physical silver and exchange it with asset management companies (AMCs) for ETF units, thereby keeping prices aligned. However, the shortage has disrupted this process, leading ETFs to trade at inflated premiums, leaving new investors at risk of overpaying.

Rising Global Demand and Local Shortage

A recent Axis Mutual Fund report highlighted that silver is facing a severe global demand-supply imbalance.

• Demand has jumped due to its use in solar panels, EVs, semiconductors, and electronics.
• Mine output has stagnated worldwide.
• Even central banks have started buying silver.

In India, festive demand and rising imports have pushed domestic silver prices 8–10% higher than international prices, creating valuation mismatches.

How Silver ETF and FoF Pricing Works

Silver’s value flows through multiple layers:

1. Global Price (LBMA) – International benchmark in USD/oz, currently around $50.
2. Import Parity Price – Converted into INR/kg with duties and taxes (10–12% extra).
3. Domestic Price – Currently 5–10% higher due to festive demand.
4. Silver ETF NAV – Reflects domestic silver prices, including premiums.
5. Silver FoF NAV – Mirrors ETF NAV; hence, investors indirectly face the same overvaluation.

This means that when silver trades at a premium domestically, that premium passes through from physical silver to ETFs and finally to Silver FoFs.

Also Read: SBI, UTI, Kotak Halt Lump-Sum Investments in Silver FoFs Amid Soaring Prices!

What It Means for Investors

The 8–10% premium means investors are effectively buying silver at a price higher than its true global value. If supply improves and prices normalise, ETF and FoF NAVs could decline even if global silver rates remain stable.

Fund houses have paused fresh investments as a protective measure to prevent investors from entering at inflated prices. 

Conclusion

ICICI Prudential’s move highlights growing caution across the mutual fund industry. The temporary halt on new Silver ETF FoF investments protects investors from short-term price distortions. Once silver supply normalises and premiums ease, fund houses are likely to reopen these schemes. Until then, investors are advised to wait and avoid fresh lump-sum entries.

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