Mutual fund houses restrict investments into gold ETFs, FoFs

MUMBAI: Mutual fund (MF) houses are restricting large inflows into gold exchange traded funds (ETFs) and fund of funds (FoFs) feeding into such schemes in order to align with govt's recent policy of discouraging people from buying gold.

Three large fund houses--HDFC MF, ICICI Prudential MF and Nippon India MF--have restricted large inflows into gold funds. The decisions will come into effect between June 5 and June 8. "In light of the broader economic and market conditions, it has been decided to temporarily restrict lumpsum subscriptions in HDFC Gold ETF and HDFC Gold ETF Fund of Fund until further notice," a communication from the fund house said.

Similar communications, in the form of addendum to the scheme information document (SID), were released by ICICI Prudential MF and Nippon India Mutual Fund.

After Prime Minister Narendra Modi urged people to buy less gold, govt increased import duty on the metal to 15% from 6%. Gold is one of the biggest import items for India.

In fiscal 2026, the total value of gold imported into the country was $72 billion, up 24% on the year.

All the three fund houses said that large investors buying gold ETFs directly from fund houses with the minimum value of Rs 25 crore, will not be allowed to do so. The fund houses also said lumpsum purchases and switch-ins into FoFs shall be processed only up to a limit of Rs 10 lakh per PAN per calendar month.

In its communication, Nippon Life said that the Rs 25-crore restriction will not apply to authorised participants and market makers. This means retail investors in gold funds would not be inconvenienced by this move. The fund house also said SIPs into gold FoFs would continue with the upper limit fixed at Rs 50,000 per PAN per day.

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