Kotak MF Stops Lumpsum Investments in Silver ETF FoF

Kotak Mutual Fund has hit pause on fresh lump sum and switch-in investments in its Kotak Silver ETF Fund of Fund (FoF), a move that is happening because of a significant difference in silver prices between the domestic and global markets. The scheme, which mirrors the domestic price of silver through its investments in the Kotak Silver ETF, will continue to accept SIPs as usual.

Explaining this temporary suspension, Kotak MF said that domestic silver is currently trading at an abnormally high premium compared to the global benchmarks due to a severe shortage of physical silver in the Indian market. The fund house said in a note issued late Wednesday to investors, "Domestic silver prices have increased well above international rates in the midst of limited supply".

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According to information from the fund house, the price gap between international landed prices & domestic silver, which stood at a modest 0.51% on September 4, escalated to as much as 12% during market hours on October 9 before easing to around 5.7%. Kotak MF expects the supply shortage in domestic silver to last through the end of October 2025.

Kotak Mutual Fund is temporarily stopping fresh lump sum investments to protect investors from contributing to silver at high domestic rates that may not match the international prices of silver. This decision aims to safeguard the interests of long-term investors during ongoing market issues.

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