Silver ETF Alert! Kotak Mahindra Stops Switch-In Investments In Silver ETF Fund of Fund From Today; Here’s Why

Silver ETF Alert: Amid high volatility of silver ETF prices, Kotak Mutual Fund has temporarily suspended lump-sum and switch-in investments in its Kotak Silver ETF Fund of Fund from Friday, October 10. The announcement has come in the backdrop of a sharp surge in ETF prices.

The situation became alarming when the domestic silver ETF prices surged way higher than international prices, apparently due to a shortage in India's physical silver market. As the Kotak Silver ETF FoF becomes unavailable from today, here are key details investors must know.

Why Did Kotak Fund Stop Silver ETF Investment?

The asset management company has cited the sharp surge in volatility of domestic silver prices over the past few days as the main reason behind shutting fresh investment in silver etfs. The decision will help save investors in entering into a highly inflated silver asset in the current scenario.

"Domestic silver is currently trading at a significant premium compared to international prices due to acute scarcity in India's physical silver market," Economic Times quoted Kotak MF statement released on Wednesday.

Kotak Halts Silver ETF Investment: What Will Happen To Existing SIPs?

The existing SIPs on silver ETF will continue as they are, but new investors won't be able to make fresh investments or start a new SIP for the time being.

The fund house has assured that subscriptions will resume once the domestic premium returns to acceptable levels. The suspension is attributed to a sharp increase 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.

The domestic silver premium has jumped from 0.5% in early September 2025 to 5.7% till October 9, 2025. Kotak Mahindra Silver ETF value fell 1.62% to close at Rs 154 on October 10. Over the past one month, its valuation has surged sharply by 27% on NSE.

The fund house emphasised that this temporary measure should not be interpreted as a negative stance on silver as a commodity. Despite high buying premiums, selling premiums remain modest at around 3%, and they continue 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," added Kotak Mutual Fund. The decision aims to safeguard investors from potential losses due to inflated entry points caused by current market conditions.