Mutual fund houses have lifted curbs on investments in silver exchange-traded fund (ETF) fund-of-fund (FoF) schemes as supply constraints ease and market premiums normalise, restoring investor access to one of the year’s most dynamic asset classes.
Tata MF among first to reopen
Tata Mutual Fund on Friday announced it had resumed accepting lumpsum investments in its silver FoF. “Considering the normalisation of market conditions, it has been decided to resume all lumpsum investments, switch-ins, and new SIP/STP registrations into the scheme effective October 24, 2025,” the fund house said.
Industry-wide reopening
Several other fund houses that had earlier suspended subscriptions citing market dislocation have followed suit. Since October 20, Aditya Birla Sun Life, HDFC, Kotak, and Axis have reopened their silver ETF FoFs for fresh inflows. SBI Mutual Fund remains the only major player yet to lift restrictions on lumpsum and switch-in investments.
Premiums ease after supply stabilises
In early October, silver ETFs traded at 5–10 per cent premiums for five straight sessions after global silver prices breached the $50-per-ounce mark. The surge, driven by a temporary shortage of physical silver, had prompted fund houses to halt new inflows to avoid overvaluation.
With supply conditions now stabilising and global prices cooling, premiums have normalised. Analysts note that investor demand has also tempered after a sharp global correction — silver ETF prices are down over 20 per cent from their record highs on October 15.
Silver’s dual role and structural demand
Silver’s price dynamics reflect more than short-term investor sentiment. The metal plays a dual role — part monetary asset, part industrial input. While it often moves in tandem with gold during risk cycles, over half of annual silver demand stems from industry, lending it a unique structural resilience.
Industrial consumption continues to climb, powered by high-growth sectors like photovoltaics, electric vehicles, and advanced electronics. Solar energy alone accounts for nearly one-fifth of global silver use, given the metal’s unmatched conductivity in photovoltaic cells. As the global shift toward electrification accelerates, demand from EV components and high-speed connectivity is expected to deepen. These applications have limited substitutes, reinforcing persistent, price-insensitive consumption.
ETF flows amplify market shifts
Silver-backed ETFs have become a key vehicle for investors seeking exposure without holding physical bullion. Their accessibility and price-tracking precision have drawn both institutional and retail participation. In 2025, strong inflows pushed global ETF holdings to record levels, with Indian silver ETFs outperforming and expanding their investor base. Temporary pauses in new subscriptions underscored both the scale of demand and the difficulty of managing premiums amid rapid price surges.
Supply lags persistent demand
Despite robust consumption, global silver supply has failed to keep pace. The market has recorded consecutive annual deficits, with cumulative shortfalls equalling several months of global mine output. Shrinking inventories in key hubs have heightened volatility and increased the likelihood of price spikes during supply squeezes.
In India, retail investment, jewellery demand, and expanding industrial use continue to underpin domestic appetite — often pushing local premiums above global benchmarks. Combined with steady ETF inflows, these factors create a structurally strong, long-term case for silver even as short-term corrections play out.
Disclaimer: Business Today provides market and personal news for informational purposes only and should not be construed as investment advice. All mutual fund investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.