Mutual Funds Halt New Investments in Gold & Silver Schemes: What Investors Need to Know

In a sudden development right before the peak festive buying season, major Indian mutual fund houses have issued notices temporarily halting fresh investments in Gold Exchange Traded Fund (ETF) Fund of Funds (FoFs) and Gold-Silver Passive FoFs starting mid-October.

If you are an investor looking to allocate fresh capital or step up your investments in precious metals, here is a complete breakdown of what is happening, why fund houses took this step, and how it impacts your portfolio.

1. What Has Been Restricted?

Effective October 16, 2026, leading asset management companies (AMCs)—including HDFC, ICICI Prudential, Kotak, Axis, SBI, Tata, Nippon India, and Invesco—have temporarily suspended key fresh transactions in Gold ETF FoFs:

• Lump-sum Purchases: No new lump-sum investments or additional single purchases are allowed.
• New SIP & STP Registrations: Fresh Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs) cannot be registered for these schemes.
• Switch-ins & SIP Top-ups: Investors cannot switch existing capital into gold schemes or step up/top up their current SIP limits.

2. What Remains Unaffected for Existing Investors?

If you already have active investments in these funds, you don’t need to panic:

3. Why Are Mutual Funds Halting Fresh Money?

While notices issued by AMCs state the restriction is “until further notice” or “temporary,” market analysis points to a combination of macro factors:

1. Regulatory Directives: Industry reports indicate the step comes following guidance from regulatory authorities (SEBI) to regulate rapid liquidity surges.
2. Rupee Pressure & Import Costs: Gold is a primary contributor to India’s import bill. With macroeconomic factors putting pressure on foreign exchange reserves, capping rapid inflows helps avoid sudden spikes in physical bullion imports.
3. Surging Festive Demand: With festive occasions like Dussehra and Diwali prompting high seasonal demand, massive retail inflows into passive gold funds were anticipated.

💡 Important Note for Existing Investors:

If you have active SIPs running, leave them untouched! Interrupting or canceling them will prevent you from restarting them until fund houses reopen fresh subscriptions.

4. Key Action Points for Retail Investors

If you are looking to manage your gold allocation during this pause, consider these steps:

• Check iNAV Before Buying ETFs: If buying Gold ETFs on the stock exchange via your Demat account, check the indicative Net Asset Value (iNAV) on the exchange to ensure you aren’t paying an excessive market premium.
• Rebalance Portfolio Allocation: Financial advisors generally recommend maintaining a 5% to 15% allocation to gold as a hedge against inflation. Avoid panic-buying or chasing elevated price rallies.
• Explore Multi-Asset Funds: Multi-asset allocation funds holding gold/silver alongside equities and debt may still offer indirect exposure where rules permit.