SBI, UTI, Kotak Halt Lump-Sum Investments in Silver FoFs Amid Soaring Prices

Kotak Mutual Fund, SBI Mutual Fund, and UTI AMC have temporarily stopped accepting fresh lump-sum investments in their Silver ETF Fund of Funds (FoFs). Silver has seen a sharp rise this year, with MCX spot prices hitting ₹1,62,432 per kg as of October 10, 2025, up over 89% from earlier levels. High industrial demand from sectors like solar energy, electric vehicles, and electronics, along with limited supply, has driven this surge.

Difference Between Silver ETFs and FoFs

• Silver ETFs invest directly in physical silver and trade like stocks via a demat account, with lower expense ratios (0.40–0.56%).
• Silver FoFs invest in silver ETFs and don’t require a demat account, but are costlier, with expense ratios between 0.70–0.96%.

Reason for Halting Lump-Sum Investments

Kotak MF cited that the sharp increase in the domestic silver premium, from 0.51% in early September to 5.7% by October 9, made new investments expensive, potentially harming investors. SBI MF and UTI AMC followed, pointing out that the limited availability of physical silver constrained the creation of new units at the indicative NAV.

Important: The suspension applies only to lump-sum and switch-in investments. SIPs (Systematic Investment Plans) and STPs (Systematic Transfer Plans) continue as usual.

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Protecting Investors Amid High Premiums

The move aims to prevent investors from entering at inflated prices caused by temporary demand-supply imbalances. Fund houses will resume lump-sum investments once premiums normalise and market conditions stabilise.

Conclusion

While the long-term investment case for silver remains strong, timing is crucial. Investors are advised to wait for premiums to ease before making large lump-sum investments, though SIPs remain a safe way to continue building exposure.

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.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.