Indian Fund Houses Halt Fresh Investments in Gold ETF Fund of Funds on Regulatory Guidance — October 16, 2026

Major Indian asset management companies have temporarily halted fresh subscriptions into Gold ETF Fund of Funds (FoFs) and combined Gold-Silver FoFs, effective October 16, 2026. The industry-wide restriction was initiated following communications from the Securities and Exchange Board of India (SEBI) through the Association of Mutual Funds in India (AMFI).

Leading fund houses—including ICICI Prudential AMC, HDFC AMC, Aditya Birla Sun Life AMC, Invesco India AMC, DSP Mutual Fund, and Tata Mutual Fund—issued addenda notifying unitholders of the operational curbs.

Why Fresh Investments Were Restricted

The temporary restrictions come right before the festive period of Dussehra and Diwali, a season historically characterized by a massive retail rush into bullion assets. In India, Gold FoFs serve as feeder funds that route investor capital into underlying Gold exchange-traded funds (ETFs).

The primary catalysts behind the regulatory intervention include:

• Bullying Current Account Deficit: India relies predominantly on imports to satisfy domestic bullion requirements. When domestic retail funds experience massive cash inflows, mutual funds must create fresh ETF units, requiring physical gold procurement that directly increases the national bullion import bill.
• Currency and Macroeconomic Pressures: High import values exert structural pressure on foreign exchange reserves and weigh on the Indian rupee amid broader global volatility.
• Preemptive Demand Management: With official gold imports having moderated to $1.8 billion in September from $2.3 billion in August, regulators sought to prevent another unchecked spike in festive paper gold demand that could spill over into physical import surges.

Transactions That Are Barred

Asset managers have uniformly clarified that fresh inflows will not be accepted until further notice.

Suspended Transactions:

• Fresh lump-sum purchases and additional investments
• New Systematic Investment Plan (SIP) registrations
• New Systematic Transfer Plan (STP) registrations where the gold scheme is the destination
• Switch-in transactions from other mutual fund schemes
• Step-up or top-up facilities on existing SIP mandates

Applications received after the specified cut-off on October 15, 2026, are subject to rejection and subsequent refunds.

What Remains Operational for Investors

Existing unitholders do not need to resort to panic withdrawals, as the core investment structures and valuations remain fully market-linked.

Permitted Transactions:

• Existing SIPs and STPs: Systematic mandates registered prior to October 16, 2026, continue to be debited and allotted units at the applicable daily Net Asset Value (NAV).
• Redemptions and Withdrawals: Unitholders are permitted to redeem units, execute Systematic Withdrawal Plans (SWPs), or switch out to other schemes without friction.
• Direct Gold ETF Buying: Investors with active demat and trading accounts can continue purchasing and selling Gold ETFs directly on the secondary markets of the National Stock Exchange (NSE) and BSE. Because secondary exchange trades take place between investors, they do not automatically trigger primary unit creation or immediate physical imports by AMCs.

Tags: SEBI AMFI HDFC AMC ICICI Prudential AMC DSP Mutual Fund Gold ETF