SBI Mutual Fund Suspends Fresh Investments in Silver ETF FoF Amid Market Volatility

With effect from October 13, 2025, SBI Mutual Fund has temporarily halted new lump-sum investments in its SBI Silver ETF Fund of Fund (FoF). The action reflects comparable responses from UTI Mutual Fund and Kotak Mutual Fund, indicating a broader pattern of asset management companies (AMCs) responding to the continued volatility of the market and the scarcity of silver.

According to the fund house, the suspension applies to all new lump-sum investments, including additional purchases and switch-ins. However, systematic investment routes such as SIPs, STPs, redemptions, and switch-outs will remain unaffected. SBI Mutual Fund clarified that the step is temporary and will stay in effect until further notice, while all other terms and conditions under the existing Scheme Information Document remain unchanged.

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SBI Mutual Fund’s decision comes soon after UTI Mutual Fund also halted new investments in its Silver ETF FoF, effective the same day. Earlier, on October 10, Kotak Mutual Fund had introduced a similar restriction on its Silver ETF FoF scheme. These back-to-back measures highlight the growing caution within the mutual fund industry as fund houses struggle with pricing disparities and supply constraints in the silver market.

Reasons Behind the Suspension

The steep increase in silver prices and the scarcity of physical silver on the international market are the main reasons for these suspensions. The price of spot silver has increased by 73.1% so far in 2025, from $29.14 to $50.44 per troy ounce. Due to decreased availability in the real market, silver prices in India have increased even more dramatically on the Multi-Commodity Exchange (MCX).

Kotak Mutual Fund reported that the domestic silver premium jumped from 0.51% on September 4 to 5.7% by October 9, significantly widening the price gap between global and local markets. This growing divergence has made it increasingly difficult and expensive for AMCs to acquire physical silver, leading to higher entry premiums and lower exit realisations for investors.

SBI Mutual Fund added that limited silver availability has made it challenging to create new ETF units at the indicative Net Asset Value (iNAV), further complicating fund management operations.

Implications for Investors

The main purpose of the suspension is to prevent investors from entering the market at exaggerated prices during sudden price increases. Fund companies seek to maintain fair pricing, risk management, and long-term stability inside their silver-focused schemes by blocking new lump-sum inflows.

While investors can continue with existing SIPs and STPs, experts suggest monitoring silver price trends closely as the current rally may eventually stabilise once supply pressures ease and global market conditions normalise.

Conclusion

The temporary halt by SBI Mutual Fund, following similar actions by UTI and Kotak, underlines the broader challenges facing the mutual fund industry in managing silver-based investment products. With silver prices soaring and supply remaining tight, fund houses are focusing on protecting investor interests while maintaining market balance. The suspension may persist until conditions in the physical silver market improve, offering fund houses more flexibility in creating new ETF units at fair valuations.