Silver Rush Paused: ICICI Prudential and Groww Hit the Brakes on Silver ETF Fund Investments

In a significant development impacting silver ETF investors, ICICI Prudential Mutual Fund and Groww Mutual Fund have announced temporary suspension of fresh subscriptions to their Silver ETF Fund of Funds, effective October 14, 2025. This move comes amid escalating domestic silver prices far exceeding international levels due to a shortage of physical silver in the Indian market.

 

The limited availability of physical silver has disrupted the typical arbitrage mechanism where market makers exchange physical silver for ETF units. Normally, this process ensures that ETF prices align closely with physical silver prices. However, with a supply crunch, this creation process has stalled, causing silver ETF units to trade at inflated premiums. To protect investors from entering the market at overvalued levels, both fund houses have halted new lump sum investments, switch-ins, and fresh registrations for Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs).

 

Key highlights:

This episode underscores the impact of physical commodity shortages on financial instruments linked to them, highlighting the risks of price distortion during supply crunches. For investors seeking exposure to silver through ETF FoFs, these measures aim to safeguard against potential overvaluation and preserve long-term interests.

 

Sources: Moneycontrol, Valueresearchonline, Citrus Interactive, NDTV Profit, Financial Express, AngelOne, TradingView News.