17 Fund Houses Shut Gold FoFs: What Happens to Your SIP Now

On the evening of October 15, notices started landing in investors' inboxes. By the next day, around 17 mutual fund houses had closed the door to new money in their gold fund of funds.

Right before Dussehra and Diwali, the season when Indian families buy the most gold. If you run a gold SIP, or were about to start one, this is what changed.

Quick answer

• About 17 fund houses, including HDFC, Kotak, Tata, ICICI Prudential and DSP, have stopped fresh lump-sum investments, switch-ins and new SIP and STP registrations in their gold fund of funds (FoFs).
• Existing SIPs registered before the cut-off continue. Redemptions, switch-outs and SWPs also continue.
• Gold ETFs still trade on NSE and BSE, so you can buy them directly with a demat account.
• No fund house has given an end date. The restrictions stay until further notice.

Why fund houses suddenly stopped gold money

The fund houses did not officially give a reason. But Shriram Mutual Fund told investors the restrictions were imposed in line with SEBI instructions conveyed through the Association of Mutual Funds in India (AMFI).

Reuters, as reported by Mint, said the move followed discussions with SEBI, and two bullion industry officials confirmed a nudge from the regulator. The distributor platform Creso said SEBI has not issued any public circular on it.

The bigger reason is the rupee. Gold is one of India's biggest imports. The rupee touched about 96.7 to the dollar on October 9, according to Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA).

Every rupee that goes into a gold ETF eventually means buying physical gold, much of it imported. With gold near $4,185 an ounce and festive demand coming, the aim is to slow dollar outflows.

The inflow jump that set it off

Gold ETF demand had been climbing fast, even while gold prices corrected in September.

Gold ETF net inflows rose from ₹2,596.70 crore in August to ₹4,450.61 crore in September

Source: AMFI data via The Economic Times

AMFI data shows gold ETFs attracted net inflows of ₹4,450.61 crore in September, up 71.4% from ₹2,596.70 crore in August.

Over the full September quarter, inflows rose 49 per cent to ₹8,606 crore from ₹5,759 crore in the June quarter, according to BusinessLine. Gold ETF assets reached ₹1.86 lakh crore.

Not everyone sees an import problem. Gold imports actually fell to $1.8 billion in September from $2.3 billion in August. A bullion dealer told Reuters the curb looks more like a precautionary step to avoid a surge in October imports.

What exactly is blocked and what still works

The restrictions cover gold FoFs, which are mutual funds that invest in gold ETFs. Examples include Kotak Gold Fund, Tata Gold ETF Fund of Fund and ICICI Prudential Gold ETF FoF. Kotak Gold Silver Passive FoF is also covered.

Stopped for now:

• Fresh and additional lump-sum investments
• Switch-ins from other schemes
• New SIP and STP registrations
• SIP top-ups or step-ups, at several fund houses

Still allowed:

• Instalments of SIPs registered before the cut-off, processed at the applicable NAV
• Redemptions, switch-outs, STP-outs and SWPs

So this is not a freeze on your money. Kothari put it simply: your units stay invested, and the NAV still tracks domestic gold prices through the underlying ETF.

One catch: if you set an annual step-up on your gold SIP, that increase may not go through. Check your fund house's notice-cum-addendum.

Who is affected

Existing SIP investors: largely unaffected. Your monthly instalment continues as usual.

New investors: you cannot start a fresh SIP or invest a lump sum in the affected FoFs while the pause lasts.

Investors who want to withdraw: you can redeem as normal under the scheme rules. HDFC, Tata, Invesco and Zerodha explicitly allow redemptions, switch-outs and SWPs.

What to do now

1. Read your fund house's notice. Do not assume everything has stopped. The rules differ slightly by fund house.
2. Do not cancel a running SIP in panic. If you stop it, you may not be able to restart it until the pause ends.
3. If you want new gold exposure, consider a gold ETF. You buy it on NSE or BSE with a demat and trading account. Experts point out these trades happen between buyers and sellers, so they do not force fund houses to import fresh bullion.
4. Look at other routes. Kothari also mentioned sovereign gold bonds from the secondary market, coins and bars from reputable refiners, and digital gold. Electronic gold receipts on the exchanges are another option.
5. Check your overall allocation. A temporary pause is not a reason to suddenly put more money into gold than your plan allows.

Red flags to watch

ETF premiums. When demand is strong, an ETF's market price can trade above the value of the gold it holds. Before buying, compare the price with its indicative NAV (iNAV). Buying at a big premium can cost you when that premium narrows.

This is already happening in silver. Akshat Garg of Choice Wealth told BusinessLine the silver ETF premium was near 0.5 per cent in early September but widened to roughly 5–10 per cent at several fund houses by the second week of October.

Chasing the headline. A pause can create a feeling that you must buy now or miss out. It does not change gold's long-term role in a portfolio.

Has this happened before?

Yes, and recently. In early June, HDFC, ICICI Prudential, Nippon India, Tata, Axis and Aditya Birla Sun Life capped fresh money in gold ETFs and gold FoFs. Gold FoF lump sums were capped at ₹10 lakh per PAN per month, and SIPs were untouched. Those curbs were lifted around August 21 as pressure on the rupee eased.

In October 2025, several fund houses paused lump sums in silver ETF FoFs and reopened them within about two weeks. This time is stricter, a complete halt rather than a cap.

FAQs

Will my existing gold SIP stop? No. SIPs registered before the cut-off continue and are processed at the applicable NAV.

Can I withdraw my gold FoF money? Yes. Redemptions, switch-outs and SWPs continue under the scheme terms.

Can I still buy gold ETFs? Yes. Gold ETFs keep trading on the exchanges. You need a demat and trading account.

When will gold FoFs reopen? No fund house has given a date. The restrictions remain until further notice.

This article is for education only and is not investment, tax or legal advice.

Sources

• The Economic Times: HDFC, Kotak, ICICI Prudential among 17 mutual fund houses to temporarily restrict subscriptions in gold ETF FoFs
• The Economic Times: Mutual funds bar fresh investments in Gold ETF FoFs. What are the rules for existing SIP investors?
• The Economic Times: Tata, HDFC, ICICI Prudential mutual funds halt fresh gold FoF investments
• Mint: Mutual funds stop bulk subscriptions to gold ETFs
• BusinessLine: Ahead of festival season, mutual funds halt fresh investments into gold FoF