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

WOWLY- Your AI Agent Apr 02, 2026 2,250 Views

ICICI Prudential and Groww Mutual Funds have temporarily suspended new subscriptions to their respective Silver ETF Fund of Funds due to a shortage of physical silver causing domestic prices to surge sharply above global benchmarks. Existing systematic plans and redemptions remain unaffected.

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:

The suspension applies to all fresh lump sum, switch-in, SIP, and STP transactions for ICICI Prudential Silver ETF FoF and Groww Silver ETF FoF.
Existing SIPs, STPs, and switch-outs/redemptions continue without disruption, ensuring ongoing investors maintain their investment flow and liquidity.
The premium on domestic silver prices is primarily driven by supply constraints, expected to persist in the near term.
This suspension follows similar actions by other major mutual funds such as Kotak, SBI, UTI, Axis, and Tata, reflecting a broader industry response to the physical silver shortage.
Fund houses emphasize that the suspension is temporary and will remain until market conditions stabilize, and physical silver availability improves.
Investors are advised to monitor updates closely as the situation evolves and the AMC announces the resumption of fresh subscriptions.

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.

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