Gold Fund-of-Funds Restrictions Continue as 17 Mutual Fund Houses Limit Fresh Investments

Key Takeaways

Around 17 mutual fund houses introduced temporary restrictions on fresh investments into specified gold ETF fund-of-funds from October 15–16, 2026.

The restrictions generally cover fresh lump-sum investments, new SIP registrations and switch-ins, while existing SIP instalments and redemptions are permitted under applicable scheme conditions.

The Economic Times revisited the restrictions on October 29, clarifying how they affect gold FoF transactions and how these schemes differ from gold ETFs.

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Temporary restrictions on fresh investments in several gold exchange-traded fund-of-funds (FoFs) remain in focus following measures introduced by approximately 17 mutual fund houses in mid-October 2026.

The restrictions, which took effect across affected schemes from October 15 and 16, generally prevent new lump-sum investments, new systematic investment plan registrations and certain other subscription transactions.

The Economic Times published a follow-up on October 29 explaining how the restrictions affect different types of transactions.

The October 29 report does not represent a new industry-wide suspension. The underlying restrictions were introduced earlier in the month.

Which Mutual Fund Houses Introduced Restrictions?

The affected fund houses include HDFC Mutual Fund, Kotak Mahindra Mutual Fund, ICICI Prudential Mutual Fund, Tata Mutual Fund, DSP Mutual Fund and Groww Mutual Fund, among others.

The restrictions apply to specified gold ETF fund-of-funds rather than automatically extending to every mutual fund scheme managed by these asset management companies.

Individual fund houses issued notices or addenda detailing the transactions affected and the effective dates.

The measures were described as temporary, with several fund houses indicating that the restrictions would continue until further notice.

What Transactions Are Affected?

Depending on the scheme, restrictions can apply to:

• Fresh lump-sum subscriptions and additional purchases.
• New systematic investment plan registrations.
• Switch-ins from other mutual fund schemes.
• New systematic transfer plan registrations.
• SIP top-ups or modifications that increase existing investment amounts.

Existing SIP and STP instalments registered before the applicable restriction date generally continue to be processed where permitted by the relevant scheme notice.

Redemptions have also generally remained available.

Investors' existing units are not automatically cancelled because a scheme has restricted fresh subscriptions.

The exact transaction rules should be read alongside the individual AMC's notice, as restrictions are not necessarily identical across all affected schemes.

Why Gold FoFs Differ From Gold ETFs

A gold fund-of-funds typically invests in units of an underlying gold ETF.

The ETF, in turn, provides exposure to gold through its underlying holdings, which generally include physical gold.

Gold FoF units are purchased and redeemed through the mutual fund framework at the applicable net asset value.

Gold ETFs are traded directly on stock exchanges, where their market prices can differ from their underlying NAV.

A key distinction is that the reported restrictions concern fresh investments into specified FoFs. The October 29 follow-up did not identify an equivalent general restriction on trading the underlying gold ETFs.

Reasons for Restrictions Have Not Been Fully Established

The fund-house notices cited in reporting did not establish one uniform public explanation for every restriction.

Market participants have discussed possible links to gold-related capital flows and demand for the underlying metal.

However, these interpretations should not be treated as confirmed regulatory reasons without an explicit official explanation.

Reports also indicated that no separate public SEBI circular announcing the restrictions had been identified at the time of the original October coverage.

Existing Holdings and Future Subscriptions

The temporary measures change the availability of certain new investment transactions. They do not change the fundamental exposure of existing gold FoF holdings to movements in gold prices.

Where existing SIPs remain permitted, their instalments are processed according to the applicable scheme terms.

The reopening of fresh subscriptions will depend on subsequent announcements from the respective fund houses.

As of the October 29 follow-up, the relevant development remains the continuation of restrictions introduced in mid-October, rather than a newly announced suspension of all gold mutual fund investments.