Silver investment: Prices surge 70%, these fund houses hit pause on fresh investments due to liquidity pressures

Silver’s performance in 2025 has captured the attention of Indian investors as the precious metal surged nearly 70% year-to-date, outpacing most other commodities. The rally has been fuelled by robust industrial demand, green energy investments, and a weakening rupee, pushing prices to new highs ahead of the Dhanteras festival. 

However, the booming silver investment market has hit a temporary roadblock. In mid-October 2025, eight leading Silver Exchange-Traded Fund (ETF) Fund of Funds (FoFs) suspended new investments, citing severe liquidity pressures and a widening gap between ETF market prices and the underlying value of silver. The pause comes after months of record inflows and unprecedented volatility, as retail and institutional investors rushed to gain exposure to silver during its historic rally.

Mutual fund houses say the move is intended to protect existing investors from entering at inflated levels. Silver ETFs have been trading at significant premiums to their Indicative Net Asset Value (iNAV), reflecting strong demand but also a mismatch between available physical silver and ETF units. As global supply tightens, ETF issuers have struggled to create new units backed by physical holdings, forcing several FoFs to temporarily halt fresh inflows.

As of 15 October 2025, eight mutual funds have imposed restrictions on new lumpsum and switch-in transactions into their Silver ETF FoFs. While most continue to allow ongoing SIP contributions from existing investors, some have suspended new Systematic Investment Plans as well. The changes began on 10 October and were largely implemented by 13 October, with each fund adjusting its approach to reflect its liquidity position and investor exposure.

Kotak, SBI, UTI, and Groww Mutual Funds have paused new lumpsum and switch-in investments but still permit SIPs for both new and existing investors. This partial restriction allows gradual exposure while limiting large-ticket inflows. In contrast, Tata Mutual Fund, ICICI Prudential Mutual Fund, and Aditya Birla Sun Life Mutual Fund have taken a stricter stance, suspending all new investments, including SIPs, effective 14–15 October. HDFC Mutual Fund has not gone for a full freeze but has capped fresh inflows at ₹1 lakh per PAN per day, a measure aimed at controlling volatility while keeping access open for small retail investors.

Meanwhile, four Silver ETF FoFs — Axis, DSP, Nippon India, and Zerodha — remain open to new investors, continuing to accept both lumpsum and SIP transactions. These funds currently face less supply strain or have managed to balance liquidity better, providing investors with ongoing opportunities to invest in silver without facing entry barriers.

Silver ETF investment

Sixteen silver ETFs and fund-of-funds have posted over 100% returns year-to-date. Leading the pack are HDFC Silver ETF FoF and ICICI Prudential Silver ETF, each effectively doubling investors’ wealth.

For investors, silver ETFs offer an efficient, low-cost way to gain exposure, while physical silver suits those seeking tangible assets, and MCX futures remain ideal for seasoned traders seeking short-term opportunities.

According to data from the Association of Mutual Funds in India (AMFI) as of 9 October 2025, most Silver ETFs have delivered one-year returns above 75%, with top performers such as Aditya Birla Sun Life, ICICI Prudential, and Nippon India posting three-year annualised returns of over 35%. A ₹1 lakh investment made three years ago would now be worth nearly ₹2.46 lakh, underscoring silver’s extraordinary run.

However, experts caution investors not to be lured by recent performance. The silver market remains highly volatile and speculative, often moving nearly 1.7 times faster than gold. Current premiums suggest that silver ETFs are trading above fair value due to short-term demand-supply imbalances. Investors are advised to check the iNAV published on the NSE or AMC websites before investing — and avoid entering when ETF prices trade significantly above the iNAV.

The recent restrictions highlight both the growing institutionalisation of silver investing in India and the structural challenges of managing physical-backed assets in a demand surge. Analysts believe that as supply stabilises and volatility moderates, suspended FoFs will gradually reopen to new inflows.

For now, silver remains a compelling but risky bet — an asset class that can deliver outsized gains in a bull market but equally sharp corrections when liquidity tightens. Investors are urged to diversify, invest gradually through SIPs, and avoid chasing short-term returns in an overheated market.

Silver outlook

According to Motilal Oswal Financial Services’ new report “Silver 2030 – The Unprecedented Rise,” silver is in the midst of a powerful multi-year bull run that could lift global prices to $75–77 per ounce by 2027, nearly 50% higher than current levels. For Indian investors, the returns could be even stronger as the rupee is expected to weaken to ₹92–95 per dollar, potentially driving silver to ₹2,45,000 per kg by 2026–27.

Silver’s price typically moves 1.7 times faster than gold, making it a high-beta metal capable of sharper rallies. Institutional and retail interest in India is surging — silver ETFs have jumped 69% year-to-date in 2025, with monthly inflows up 180%.