Kotak Mutual Fund Halts Lumpsum Investments in Silver ETF FoF Amid High Premiums

Kotak Mutual Fund has temporarily stopped accepting lump sum and switch-in applications into its Silver ETF Fund of Fund (FoF), citing abnormal premiums in domestic silver prices. This move aims to protect investors from overpaying for silver as local prices remain much higher than international benchmarks.

Kotak Mutual Fund Suspends New Lumpsum Entries into Silver ETF FoF

On October 9, 2025, Kotak Mutual Fund announced it will no longer accept new lump sum or switch-in investments into its Silver ETF FoF. This scheme invests in Kotak Silver ETF, which closely tracks silver prices in India. The decision was prompted by a sharp surge in domestic silver premiums caused by severe supply shortages in India’s physical silver market.

Significant Price Disparity Between Global and Domestic Silver

As of October 9, 2025, the spread between international silver prices and domestic market prices had widened drastically. While the price gap was only 0.51% on September 4, it jumped to 12% intra-day on October 9 before closing at 5.7%. This rapid fluctuation highlights the volatility and lack of supply that have shaken the domestic silver market.

Continuity of Existing SIPs

While new lump sum investments are on hold, existing Systematic Investment Plans (SIPs) will continue without disruption. This ensures that retail investors who are investing regularly via SIPs are not affected, while preventing fresh capital from entering the scheme at current unfavourable price levels.

Read More: Why Silver Is Shining in 2025: A 60% Rally Explained!

Domestic Silver Shortage May Persist Till October 2025

Kotak Mutual Fund expects the domestic shortfall in silver supplies to persist until the end of October 2025. The scarcity has led to aggressive bidding in the open market, thereby inflating Indian silver prices far above international landed costs.

Risk Management and Investor Interest Protection

By temporarily halting new lump-sum investments, Kotak Mutual Fund aims to safeguard investor interests by avoiding exposure to inflated domestic silver valuations. This is a preemptive move to shield investors from potential value erosion in the short term.

Conclusion

Kotak Mutual Fund’s suspension of fresh lump-sum inflows into its Silver ETF FoF reflects a prudent risk-control measure amid abnormal domestic silver premiums. The pause helps prevent new investors from entering at unfavourable price points and positions the fund for better capital protection during market discrepancies.

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