Kotak Mahindra Mutual Fund has temporarily suspended lumpsum and switch-in investments in its Kotak Silver ETF Fund of Fund, effective October 10, 2025, citing a significant demand-supply imbalance in India’s physical silver market.
According to the fund house, the move comes as domestic silver prices are trading at steep premiums to international rates due to acute scarcity. Data from MCX Spot Price and LBMA showed that the premium widened sharply from 0.51% on September 4 to 5.7% as of October 9, 2025, peaking intraday at nearly 12% before closing lower.
Kotak said that lumpsum and switch-in investments will resume once premiums normalize to acceptable levels. However, SIP (Systematic Investment Plan) and STP (Systematic Transfer Plan) investments will continue without interruption.
The fund house clarified that this temporary restriction “should not be interpreted as a negative view on silver as a commodity,” maintaining a constructive long-term outlook. The buying premium currently stands near 10%, while the selling premium is around 3%, highlighting market distortions caused by limited supply.
Kotak Mutual Fund expects the shortage in domestic silver supply to persist through the end of October 2025, and stated that the suspension aims to protect investors from entering the market at inflated prices.
The Kotak Silver ETF Fund of Fund is an open-ended scheme investing in units of the Kotak Silver ETF, designed to provide investors exposure to silver as part of a diversified portfolio.