Mutual fund houses in India have halted fresh investments in gold Fund of Funds (FoFs) amid concerns over the country’s current account deficit and continued pressure on the rupee. The restrictions took effect on Friday, October 16, 2026, following instructions reportedly issued by the Securities and Exchange Board of India (SEBI).
The move affects new lump-sum investments and registrations for systematic investment plans (SIPs), systematic transfer plans (STPs) and switches into gold FoF schemes. However, existing registered transactions will continue, while gold and silver exchange-traded funds (ETFs) remain open for investment.
What Has Changed for Gold Mutual Fund Investors?
Fund houses issued notices late on Thursday announcing restrictions on fresh investments in gold FoFs. From Friday, investors can no longer register new lump-sum purchases, SIPs, STPs or switches into the affected schemes.
Existing SIP, STP and switch transactions will continue as scheduled, according to the notices described in the report. This means the restrictions primarily affect new investment registrations rather than automatically stopping ongoing investments.
Some fund houses have also introduced similar restrictions on silver Fund of Funds, indicating that the measures may extend beyond gold-linked products.
Gold ETFs and Silver ETFs Remain Open
Despite the restrictions on FoFs, investors can still invest in gold ETFs and silver ETFs. These exchange-traded products remain available for investment under the reported measures.
One key difference is how investors access these products. Gold and silver FoFs allow people to invest through mutual fund accounts without requiring a demat account. ETFs, by contrast, are generally purchased and sold through a demat and trading account.
Industry officials expect the restrictions to affect overall investment flows into precious metals to some extent, as FoFs are a popular route for retail investors, particularly those investing through distributors.
Why Have Fund Houses Introduced These Restrictions?
The decision comes amid concerns about the current account deficit and pressure on the Indian rupee. Gold is one of India’s largest imports by value, making demand for the metal an important consideration in discussions about the country’s external finances.
The restrictions also follow a similar move in June, when fund houses limited investments in FoFs and the creation of new units in ETFs amid challenging economic and market conditions. At that time, the measures came as the rupee depreciated sharply and calls were made to reduce gold investments.
Most fund houses subsequently lifted those restrictions over the following months.
What Should Investors Know?
For existing gold FoF investors, the key distinction is between ongoing transactions and new registrations. Existing SIP, STP and switch transactions are expected to continue, while fresh registrations and lump-sum investments in the affected schemes have been suspended.
Gold and silver ETFs remain available, although they operate differently from FoFs and generally require a demat account.
Investors should check the latest notice issued by their respective fund house before making a transaction, as the restrictions may vary across schemes and could change with market and regulatory developments.
