SBI Mutual Fund Halt Investments in Silver Funds Amid Price Premium

On October 13, 2025, SBI Mutual Fund decided to temporarily suspend fresh investments in their silver exchange-traded fund (ETF) fund of funds. The decision comes amidst a notable shortage of physical silver in India, pushing local prices well above international rates and raising concerns over fair valuation for investors.

Why SBI Mutual Funds Halted Silver Investments

SBI Mutual Fund house announced a temporary pause on accepting fresh flows into their silver ETF fund of funds, starting October 13, 2025. The key concern leading to this action is the growing disparity between local and global silver prices caused by a physical shortage of the white metal in India. 

Domestic silver is currently trading at a high premium, making new investments potentially less beneficial for investors. The halt, as stated, aims to safeguard investors from entering at inflated price levels.

Impact of Physical Silver Shortage

The root cause of the investment freeze lies in the tight physical supply of silver in the Indian market. This scarcity has pushed up local prices significantly, leading to a price structure that deviates from global benchmarks. 

The inability of silver ETFs to acquire physical silver at reasonable international prices has created valuation concerns for fund managers. Therefore, the halt is seen as a precautionary measure until markets stabilise.

Read More: UTI AMC Suspends Fresh Investments in Silver ETF Fund of Fund!

Investor Implications and Fund Strategy

The suspension only impacts new investments in silver fund of funds schemes, and does not affect existing investor holdings. Investors who already have units of these funds will continue to stay invested. The fund houses have not disclosed a timeline for when fresh subscriptions might resume, indicating that the situation may persist until a detectable improvement in silver supply and pricing parity occurs.

Conclusion

SBI Mutual Fund has proactively halted new investments into silver-backed funds due to disproportionate local premiums over global rates. This step aims to protect investor interests until silver markets return to a better equilibrium. Current investors remain unaffected by the suspension, while future inflows will depend on silver price normalisation.

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