Tata Mutual Fund Presses Pause Button on Silver ETF Subscriptions Due to Silver Shortage

Tata Mutual Fund has temporarily suspended fresh subscriptions to its Tata Silver ETF Fund of Fund due to a shortage of physical silver and market volatility. Existing SIPs continue, and redemptions are allowed. The move protects investors against valuation distortions amid premium domestic silver prices.

Tata Mutual Fund has announced a temporary suspension of subscriptions to its Tata Silver ETF Fund of Fund (FoF), effective from October 14, 2025, citing challenging market conditions and a shortage of physical silver in the domestic market. This move aligns with similar suspensions by other major asset management companies, including UTI AMC, SBI Mutual Fund, and Kotak Mutual Fund, all responding to sharp price rallies and supply constraints in the silver market.

Key highlights of the suspension include:

Suspension covers all fresh lump sum investments, switch-ins, and new registrations of Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs) for the Tata Silver ETF FoF.

Existing SIPs and STPs will continue uninterrupted during this period.

Redemptions, switch-outs, and Systematic Withdrawal Plans (SWPs) remain allowed as per existing scheme guidelines.

Domestic silver prices are currently trading at a significant premium over international levels due to constrained physical supply, which distorts ETF valuations.

The suspension is a precautionary measure to protect investor interests from potential mispricing and remains temporary until market conditions stabilize.

The Tata Silver ETF FoF primarily invests in the Tata Silver Exchange Traded Fund, which aims to track domestic silver prices closely.

The decision reflects broader volatility and supply-side challenges affecting the precious metals space in India. With silver futures rising rapidly—up 77% in six months and continuing to surge—fund houses are adopting cautious approaches to mitigate risks associated with inflated premiums in domestic silver prices versus global benchmarks.

By suspending fresh inflows, Tata Mutual Fund and its peers aim to maintain fair pricing and protect existing investors during this period of market distortion caused by supply shortages. Investors may continue to transact through existing systematic plans and redemptions, ensuring liquidity and flexibility.

This step underscores the importance of monitoring physical commodity availability alongside market demand dynamics in the silver ETF segment. Investors are advised to stay informed about evolving conditions, as normal subscription activities will resume once the physical silver market stabilizes and valuation discrepancies diminish.

Source: Moneycontrol, The Hindu Business Line, Fortune India, Business Standard

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