Two of India’s largest asset management companies, HDFC Mutual Fund and ICICI Prudential Mutual Fund, have imposed restrictions on large investments in their gold exchange-traded funds (ETFs), citing exceptional demand for gold-linked investment products. The move comes after a sharp rally in gold prices and a surge in investor interest in safe-haven assets.
HDFC Mutual Fund was the first to announce restrictions. Beginning June 8, the fund house stopped accepting direct subscriptions of ₹25 crore or more into its HDFC Gold ETF. It also introduced a cap on lump-sum investments in its Gold ETF Fund of Fund (FoF), limiting investments to ₹10 lakh per PAN per calendar month. The restrictions are temporary and will remain in place until further notice.
Soon after, ICICI Prudential Mutual Fund announced similar measures for its Gold ETF. The fund house restricted large direct subscriptions from June 5, becoming the second major asset manager to curb inflows into gold ETFs amid rising demand.
Importantly, the restrictions do not affect systematic investment plans (SIPs). Investors who regularly invest through SIPs can continue their contributions without any changes. Small investors purchasing ETF units through stock exchanges are also largely unaffected by the new limits.
Industry experts say the restrictions are intended to help fund managers manage large inflows efficiently and maintain portfolio stability. Gold ETFs invest in physical gold, and a sudden surge in subscriptions can create operational and liquidity challenges. Fund houses may also be responding to broader economic considerations linked to gold imports and market conditions.
Gold prices have risen significantly over the past year amid global economic uncertainty, geopolitical tensions and strong investor demand. As a result, gold ETFs have attracted substantial inflows from investors seeking portfolio diversification and protection against market volatility.
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