'Silver ETF premiums are a temporary phenomenon': AMFI chief Venkat Chalasani amid record inflows

Silver is shining brighter than ever. On October 9, the white metal breached the $50-an-ounce mark for the first time, while domestic prices soared to Rs 1.63 lakh per kg — an all-time high that triggered a rush of new investors into Silver ETFs. The frenzy has pushed ETFs to trade at steep premiums over indicative net asset values (iNAVs), reflecting a temporary demand-supply mismatch as physical silver supply tightens globally.

Amid growing investor concern over inflated valuations, Association of Mutual Funds in India (AMFI) Chief Venkat Chalasani clarified that the surge in ETF prices and premiums is not a structural issue but a short-term imbalance driven by global supply constraints. “The spot price is higher than the futures in terms of silver,” he explained, pointing to an unusual market condition where immediate demand far exceeds available supply.

Chalasani emphasised that the premium spike is a “temporary phenomenon”. “This overvaluation is largely a reaction to the global shortage and not an indication of any problem within the domestic ETF ecosystem,” he said during an AMFI conference call, assuring investors that the market would stabilise as supply catches up.

In September alone, Silver ETFs recorded all-time high net inflows of ₹5,341.67 crore, underscoring surging investor enthusiasm. The total assets under management (AUM) for Silver ETFs soared to ₹36,460.94 crore, up sharply from ₹26,292.34 crore in August — a jump of nearly ₹10,000 crore in a month. This surge came as investors sought refuge in silver amid global uncertainty, inflationary fears, and a broader commodities rally.

Amid the excitement, Kotak Mutual Fund took a precautionary step, temporarily halting lump-sum investments in its Kotak Silver ETF Fund of Fund, citing “sharp spot premiums over import parity prices.” Managing Director Nilesh Shah said the move was prudent and investor-centric, designed to avoid entry at distorted prices, though SIPs and redemptions remain unaffected.

Silver ETFs cool down

Silver ETFs cooled on Friday following the blistering rally. HDFC Silver ETF fell 3.9%, Kotak Silver ETF slipped 2.9%, and Nippon India Silver ETF eased 1.1%. Still, despite the pullback, silver funds remain up 7–11% for the week and have surged up to 86% in 2025 so far, reflecting extraordinary momentum.

The record inflows have prompted fund houses to tighten their internal risk management frameworks. Chalasani clarified that no collective AMFI directive had been issued: “Each individual AMC has its own risk management policy. Individual AMCs will take a call. No collective decision has been taken yet.”

Market analysts note that while the premiums may normalise once supply conditions ease, investor appetite for silver remains strong due to its industrial relevance and safe-haven appeal. For now, the AMFI chief’s message is clear — the silver rush is real, but the premium panic is temporary.