Axis, Tata MFs halt new silver ETF FoF investments amid supply crunch

Axis Mutual Fund and Tata MF suspend new investments in their silver ETF FoFs as soaring silver prices and supply shortages push ETFs to trade at steep premiums

Axis Mutual Fund (MF) and Tata MF have become the latest fund houses to stop accepting new investments in their Silver ETF Fund of Funds (FoFs). The move follows similar actions by Kotak, UTI, and SBI MFs over the past few days.

 

The suspensions come amid a sharp rise in silver prices and a shortage of physical silver in the domestic market. This has caused silver ETFs to trade at a steep premium over their indicative net asset values (iNAVs).

 

“Supply constraints in physical silver are causing a surge in silver ETF prices as ETFs are backed by physical precious metal — i.e., silver ETFs are trading at a premium to their respective iNAVs. Till this supply uncertainty reduces and the demand-supply scenario stabilises, we have decided to temporarily suspend all fresh and additional lumpsum investments, switch-ins, and fresh SIP transactions in Tata Silver ETF FoF,” Tata MF said.

 

Silver ETF premiums surge amid price rally

 

Most silver ETFs were trading at a premium of 5–10 per cent on Monday as the rally in the precious metal continued. The ETFs, which are up over 77 per cent in the past six months, gained another 7–10 per cent on Monday.

 

“Domestic silver ETF prices are currently experiencing distortions due to heightened demand and ongoing supply constraints,” Axis MF said.