Kotak MF halts lumpsum, switch-in investments in silver ETF Fund of Fund

The existing SIP (Systematic Investment Plan) and STP (Systematic Transfer Plan) in Kotak Silver ETF Fund of Fund will however remain active

Kotak Mutual Fund has announced a temporary suspension of lumpsum and switch-in investments in its Kotak Silver ETF Fund of Fund, effective October 10, 2025. The decision comes in response to a significant premium on domestic silver compared to international prices, driven by acute scarcity in India’s physical silver market.

 

However, existing Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) investments will continue to remain active. The fund house also stated that subscriptions will resume once the domestic premium normalises to acceptable levels.

 

Reason behind the suspension

 

The suspension has been prompted by a sharp rise in domestic silver premiums. “Domestic silver is currently trading at a significant premium compared to international prices due to acute scarcity in India's physical silver market. We anticipate that the shortage in domestic silver supply may persist through the end of October 2025,” the company said in a statement.

 

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Explaining further, Kotak Mutual Fund noted that the domestic silver premium has increased sharply, from about 0.5 per cent in early September 2025 to 5.7 per cent as of October 9, 2025. On Thursday, the intraday premium briefly peaked at 12 per cent before settling at 5.7 per cent. Under current market conditions, the buying premium stands at around 10 per cent, while the selling premium is approximately 3 per cent.

 

Constructive long-term outlook

 

Kotak Mutual Fund emphasised that the temporary measure should not be seen as a negative view on silver as a commodity. Despite high buying premiums, selling premiums remain modest at around 3 per cent, and the fund continues to maintain a constructive long-term outlook on silver investments.

 

“This measure is purely intended to protect investors from entering the market at inflated domestic premiums,” the fund house added.  (Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)