Many mutual funds have discontinued Silver ETFs.
Tata Mutual Fund and Axis Mutual Funds have temporarily banned the fund of funds of their silver ETFs. In fact, this step has been taken citing shortage of physical silver in the domestic market and huge premium in local prices compared to the global benchmark. This restriction has become effective from October 14, 2025 and will be applicable on lump sum purchases, switch-ins and new registrations of Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) in the scheme. According to the fund house, this step has been taken to protect investors from possible mispricing in the net asset value (NAV) of the scheme due to unusual market conditions. Tata Mutual Fund said that due to the current market conditions and shortage of physical silver in the domestic market, silver is trading at a premium compared to international prices. This premium directly impacts the valuation of the plan. Before Tata and Axis, SBI, UTI and Kotak have taken these steps.
There is no ban on these
There is a ban on new subscriptions, but existing investors will be unaffected by this. Tata MF has clarified that: Existing SIPs and STPs already registered will continue as scheduled. Redemption, switch-out and Systematic Withdrawal Plan (SWP) will be processed as normal. Transactions submitted before 3:00 PM on October 13, 2025 will be accepted and processed at the applicable NAV. The suspension is temporary and will continue only until further notice. This step has been taken at a time when the Indian silver market is facing supply shortage. Domestic prices have risen sharply during the festive season, and silver is trading 5-12 per cent higher than international prices.
Why has the premium increased in the local market?
There is a huge demand for silver coins, bars and jewelery during festivals. An increase in prices is also being seen due to indium demand for silver in sectors like solar energy, EV and electronics. There is a huge shortage in imports and there is a shortage of fickle silver in the market. Since the Tata Silver ETF fund of funds invests in the Tata Silver Exchange Traded Fund (ETF) – which directly tracks the domestic price of silver – this divergence between the local and international markets makes it difficult for new investors to properly evaluate the scheme. By stopping new investments, Tata MF aims to save investors from overpaying in this era of increased silver prices.
They also closed ETF
Apart from Tata Mutual Fund and Axis Mutual Fund, several mutual funds in India including Axis, Kotak, UTI and SBI have temporarily suspended fresh investments in their silver ETF fund-of-funds (FOFs). This step has been taken amid the sharp rise in silver prices and the increasing difference between domestic and international silver valuations. The supply of physical silver in the domestic market is very less. Due to rising industrial demand, festive buying and import constraints, it has become challenging to get silver at affordable prices. This shortcoming makes it difficult for mutual fund and ETF structures to maintain the relationship between the fund’s NAV and the metal.
How much impact will it have on investors?
Existing Investors: Your SIP, STP and holdings will continue to function as normal. You can redeem, switch out or withdraw through SWP as per the scheme rules.
New Investors: You cannot start new lump sum investments or switch-ins until the suspension is lifted.
pending order: Transactions on or before 3:00 pm on October 13, 2025 will be processed as per the existing rules.