Stories
Mutual Funds Restrict Fresh Investments in Gold ETF FoFs
- •Several major mutual fund houses have temporarily restricted fresh investments in gold ETF fund of funds starting October 16.
- •The restrictions apply to lump-sum investments, new SIP registrations, SIP top-ups, and new systematic transfer plans following regulatory nudges.
- •Existing SIP and STP instalments registered before the deadline will continue to be processed normally, and redemptions remain unaffected.
- •The temporary curbs come just ahead of the festive season when demand for gold typically surges.
- •The restrictions apply specifically to gold ETF FoFs and are not a blanket ban on purchasing physical gold or investing directly in gold ETFs.
Key Questions Answered
Fund houses such as ICICI Prudential Mutual Fund, HDFC Mutual Fund, Aditya Birla Sun Life Mutual Fund, Invesco India Mutual Fund, DSP Mutual Fund, Tata Mutual Fund, and Shriram Mutual Fund issued notices temporarily restricting fresh investments in their gold ETF fund of funds.
The curbs apply to fresh lump-sum investments, new systematic investment plan (SIP) registrations, and additional investments through existing SIP top-ups. Certain fund notices also restrict switch-in transactions and new systematic transfer plan (STP) registrations.
Shriram Mutual Fund stated the restrictions followed instructions from the Securities and Exchange Board of India (SEBI) conveyed via AMFI. Sources noted that increased bullion imports can pressure India's trade balance and rupee ahead of the festive season demand.
