Should you invest in Silver now? Well, if your answer is yes, then some of India’s top fund houses disagree with you. And they won’t even let you invest in silver through their Exchange Traded Fund of Funds (ETF FoF).
What’s happening with Silver
So, here’s what’s happening. Silver prices have surged over 60% in 2025, and domestic prices have hit record highs of around ₹1,85,000 per kilogram. Now, this dramatic surge has made many of us keen to jump on the bandwagon.
But mutual fund houses such as Kotak Mutual Fund, SBI Mutual Fund and UTI Mutual Fund have suspended investments in silver ETF Funds of Funds.
Silver ETF FoFs suspension
So, why have fund houses taken this drastic step? Here’s the reason behind the move. There’s a shortage of silver in India due to high investment demand. The festive season and limited supply have made the situation worse.
The shortage, the price surge
This shortage has resulted in domestic prices becoming much higher than international silver prices. In fact, in the last few sessions, silver in India has been trading at a 10–12% premium to international prices.
Now, ETFs create units based on domestic silver prices. But since that value is distorted, these fund houses do not want investors to suffer. Therefore, to protect investors, they have stopped accepting fresh investments in silver ETF FoFs.
Silver: Nilesh Shah’s take
Announcing the decision, Nilesh Shah of Kotak MF wrote on X, “Keeping in mind the high spot premium for silver over the import parity price, Kotak MF is suspending lump sum subscriptions in Kotak Silver ETF Fund of Fund.”
However, the company has said that SIPs and redemptions will continue as before in the regular course of business. It also clarified that Kotak Silver ETF, being a listed fund, doesn’t have a provision for suspension.
Talking about the road ahead, Nilesh Shah said, “Whenever the spot premium aligns with the import parity price, the Fund of Fund will open for subscription, as we continue to maintain a bullish outlook on silver as an asset class on a long-term basis.”
What to learn from MFs
In fact, you must take a cue from this and avoid investing in silver in physical form as well. The best way, according to experts, is to wait and watch. Let the India premium on silver settle down, and then decide whether you should add it to your portfolio.
