Mutual funds halt investments in gold ETF FoFs: What it means for investors
Gold is one of India’s largest imports, and inflows into gold and silver ETFs surged over the years
Gold ETF FOFs subscriptions paused
Several mutual fund houses have stopped accepting fresh money in their gold exchange-traded fund fund-of-funds (FoFs), just as festive demand for gold peaks.
ICICI Prudential Mutual Fund, Kotak Mutual Fund, Axis Mutual Fund and Tata Mutual Fund issued addendums on October 15. These temporarily stop fresh lump-sum investments, switch-ins and new SIP and STP registrations in their gold FoFs, with effect from October 16.
Aditya Birla Sun Life, DSP and Invesco India have also restricted their gold FoFs, as per the addendums put out on their websites.
A Gold ETF FoF is a mutual fund scheme that invests in gold ETFs. It offers exposure to gold through the mutual fund route, unlike ETFs, which one can invest in through the demat route.
What’s stopped, and what isn’t
New money is blocked, which includes fresh and additional lump sums, switch-ins, new SIP and STP registrations and, at some fund houses, SIP top-ups.
Existing investors are largely protected. SIPs and STPs registered before the cut-off will continue, and instalments will be processed at the applicable NAV. Redemptions, switch-outs and SWPs are not affected.
None of the fund houses has said when subscriptions will reopen. Most notices describe the restriction as being in force “till further notice”.
Why now?
The notices give no reason. The likely trigger is the rupee. It has fallen about 7 percent this year, under pressure from higher oil prices and foreign selling of Indian shares. Gold is one of India’s largest imports, and inflows into gold and silver ETFs surged during the year.
Gold exchange-traded funds attracted Rs 4,450.61 crore in September 2026, a sharp increase of 71 percent from Rs 2,596.70 crore in August, according to the latest data from the Association of Mutual Funds in India (AMFI).
September’s inflows were the highest monthly collections since January 2026. More importantly, gold ETFs have already attracted more money in the first nine months of 2026 than they did during the entire previous calendar year.
Gold ETFs received cumulative net inflows of approximately Rs 45,925 crore between January and September 2026, compared with Rs 42,961 crore during the whole of 2025.
Earlier this year, the government raised the import duty on gold and silver to 15 percent from 6 percent.
This is not the first such curb this year. In June, several fund houses capped large investments in gold ETFs and FoFs, and those limits were eased in August.
What should you do?
If you already invest through a gold FoF SIP, nothing changes. Your instalments will continue.
If you want to buy gold now, you can still buy gold ETFs on the stock exchange through a demat account. Gold ETFs bought on the exchange are not covered by these notices. But be careful: if demand shifts to the exchange, ETF units can trade at a premium to their actual value. Check the indicative NAV (iNAV) on the AMC’s website or the exchange before you buy.
The pause is also a good moment to check your allocation. Gold has rallied sharply. Financial planners typically suggest keeping it to 10–15 percent of a portfolio, as a diversifier rather than a return chaser.
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