HDFC Mutual Fund lifts Rs 1 lakh daily cap, reopens full investments in Silver ETF Fund of Fund

HDFC Mutual Fund has resumed full subscription access to its HDFC Silver ETF Fund of Fund (FoF) after a brief investment cap imposed last week. Investors can once again make lump-sum investments, switch-ins, and register new SIPs (Systematic Investment Plans) and STPs (Systematic Transfer Plans) without any restrictions.

The asset management company (AMC) had temporarily capped fresh investments at Rs 1 lakh per PAN per day from October 14 (post 3:00 pm) amid a surge in domestic silver prices. The decision was taken to ensure investor protection, as Indian silver rates had begun trading at a noticeable premium to global benchmarks due to supply constraints in the market.

Why the restriction was imposed

Over the past week, silver prices in India had jumped sharply, outpacing global price movements. To manage the risk of inflated valuations and potential arbitrage opportunities, HDFC Mutual Fund introduced a daily investment cap instead of suspending subscriptions altogether. The move aligned with broader industry actions, as several other mutual funds also responded to the silver price volatility.

Fund houses such as ICICI Prudential, Tata, Kotak, SBI, and UTI Mutual Fund had previously suspended new subscriptions or switch-ins into their respective Silver ETF FoFs. More recently, Aditya Birla Sun Life, Axis, and Groww Mutual Fund also followed suit by temporarily restricting lump-sum inflows.

In contrast, HDFC Mutual Fund chose a more measured approach by implementing a quantitative cap rather than a complete halt. The AMC has now removed that cap, signaling a normalization of conditions and improved pricing dynamics in the silver market.

What remains unchanged

Throughout the temporary cap period, existing SIPs and STPs continued uninterrupted, ensuring that ongoing systematic investments were not impacted. Similarly, redemptions from the fund were always permitted, allowing investors to redeem their holdings as per usual.

In its statement, HDFC Mutual Fund clarified that both the temporary restriction and the subsequent reopening were made in the best interest of investors, given the rapidly changing market environment.

The move comes as the silver market stabilizes, and investor interest in silver-based passive schemes remains strong amid heightened global uncertainty and rising demand for precious metals as a hedge against inflation and currency weakness.

Investing in Silver ETF FoFs

Kotak Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, and Groww Mutual Fund have temporarily stopped accepting fresh lump-sum and switch-in investments in their Silver ETF Fund of Funds (FoFs). However, these fund houses continue to permit SIP contributions for both existing and new investors.

The restrictions were rolled out in stages starting October 10, with Kotak leading the move, followed by SBI, UTI, and Groww implementing similar measures on October 13. Meanwhile, Tata Mutual Fund, ICICI Prudential Mutual Fund, and Aditya Birla Sun Life Mutual Fund have taken a stricter approach by halting all new investments—including lump-sum, switch-ins, and SIPs—effective October 14 and 15, respectively.