Axis Mutual Fund Halt New Silver ETF Investments Amid Supply Constraints

In a move reflecting growing turbulence in the precious metals market, Axis Mutual Fund has temporarily suspended new investments in their Silver Exchange-Traded Fund (ETF) Fund of Funds (FoFs). 

The decision follows similar steps taken recently by Kotak, UTI, and SBI Mutual Funds, as rising silver prices and tightening supply conditions have disrupted price stability in the segment.

Market Turbulence Hits Silver ETFs

The sharp surge in silver prices, combined with an acute shortage of physical silver in the domestic market, has pushed Silver ETFs to trade at a steep premium compared to their indicative net asset values (iNAVs). As these funds are backed by physical silver holdings, the supply crunch has created valuation distortions, forcing fund houses to act cautiously.

Rally Drives Premiums to Record Highs

According to market data, most silver ETFs were trading at premiums of 5–10% on Monday, highlighting the disconnect between market price and underlying asset value. The precious metal’s price has surged over 77% in the past six months, with another 7–10% gain recorded in a single day as investor enthusiasm continues to fuel the rally.

As per the news reports, Axis Mutual Fund noted, “Domestic silver ETF prices are currently experiencing distortions due to heightened demand and ongoing supply constraints.”These conditions have made it difficult for fund managers to source silver efficiently, prompting multiple asset management companies to halt inflows into silver-based investment products until market equilibrium is restored.

Read More: Tata Mutual Fund Temporarily Suspends Investments into Tata Silver ETF Fund of Fund!

Conclusion

With major mutual funds pausing new investments, the Silver ETF segment in India faces a temporary cooling period as the market grapples with supply shortages and inflated prices. Once physical silver availability stabilises and valuation gaps narrow, experts anticipate fund houses will reopen their silver investment avenues, restoring normalcy to the growing precious metal ETF ecosystem.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.