Kotak Mutual Fund has announced a temporary halt on lumpsum and switch-in investments in its Kotak Silver ETF Fund of Fund, effective October 10, 2025. The suspension comes in response to a sharp rise in domestic silver premiums, caused by an acute scarcity in India’s physical silver market.
Impact on Investors
Existing Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) contributions will continue uninterrupted. The fund house clarified that subscriptions will resume once the domestic premium normalizes to acceptable levels, ensuring investor protection.
Reason for Suspension
Kotak Mutual Fund explained that domestic silver is trading at a significant premium compared to international prices due to limited supply in India.
- In early September 2025, the premium was around 0.5%.
- By October 9, it surged to 5.7%, peaking intraday at 12%.
- Under current conditions, the buying premium is roughly 10%, while the selling premium is about 3%.
The fund highlighted that this temporary suspension is a precautionary measure to protect investors from entering the market at inflated domestic prices.
Long-Term Outlook on Silver
Despite the high premiums, Kotak Mutual Fund remains constructive on silver as a long-term investment. Selling premiums remain modest, and the suspension is not indicative of a negative view on silver’s investment potential.
Summary
Kotak Mutual Fund has temporarily suspended lumpsum and switch-in investments in its Silver ETF Fund of Fund due to record-high domestic silver premiums. SIP and STP contributions will continue, and subscriptions will resume once market premiums normalize. The fund maintains a positive long-term outlook on silver as an investment.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.