Gold FoF Inflows Paused Before Diwali, Existing SIPs And Withdrawals Continue

New Delhi: Several mutual fund houses have temporarily stopped accepting fresh investments into gold exchange-traded fund fund-of-funds, or Gold ETF FoFs, from October 16, according to investor communications cited in reports.

The restrictions arrive ahead of the festive season, when gold buying typically increases. Asset managers said the measures would remain effective until further notice.

Fresh Gold FoF Investments Restricted

The curbs cover fresh lump-sum subscriptions, new systematic investment plan registrations and requests to increase contributions under existing SIP mandates.

Top-up and step-up facilities are also affected. Some fund houses have restricted switch-in transactions and new systematic transfer plan registrations.

The scope depends on the scheme’s notice, making the applicable investor communication important for anyone planning a fresh allocation.

Existing SIPs And Redemptions Continue

Previously registered SIP and STP instalments will continue to be processed, according to the notices.

Redemption requests and switch-out transactions remain unaffected, allowing investors to withdraw or transfer their existing holdings under the usual scheme provisions.

The distinction means the suspension primarily affects new subscriptions and additional investment commitments, rather than automatically stopping previously scheduled instalments.

One fund house said applications received after Thursday’s specified cut-off could be rejected, with investors receiving their money back.

Reason For Suspension Remains Unclear

Reports said the notices did not specify a reason for the restrictions.

One asset manager referred to instructions conveyed through industry channels following regulatory consultations. However, the available communications did not establish a specific explanation for the wider move.

The restrictions concern Gold ETF FoFs; the reports do not establish a suspension of all gold investment products.

Festive Demand And Forex Concerns

The development comes before Dussehra and Diwali, traditionally important periods for domestic bullion demand.

India depends heavily on imported gold, and increased purchases can affect the trade deficit and foreign exchange requirements.

Earlier this year, Prime Minister Narendra Modi urged citizens to avoid gold purchases for a year, citing national interests amid global uncertainty.