- HDFC Mutual Fund restricts gold ETF investments above Rs 25 crore from June 8
- Limits lump-sum FoF investments, monthly subscriptions capped at Rs 10 lakh
- Move aims to address rising gold imports impacting India’s external account
HDFC Mutual Fund has become the first major asset manager to restrict large subscriptions into gold-linked mutual fund schemes, a move that industry sources say could prompt other fund houses to adopt similar measures.
According to sources, Several asset management companies are evaluating restrictions on inflows into gold exchange-traded funds (ETFs) and Gold ETF Fund of Fund (FoF) schemes amid concerns over rising gold imports and their impact on India's external account.
HDFC Mutual Fund had announced that investments of Rs 25 crore and above in its Gold ETF will not be accepted from June 8. The restrictions apply to transactions received after 3 p.m. on June 5.
The fund house has also imposed limits on investments in its Gold ETF Fund of Fund. While lump-sum subscriptions have been capped, monthly investments through the scheme will be restricted to Rs 10 lakh.
The asset manager said the decision was taken in view of prevailing economic and market conditions.
The development is significant given the rapid growth in gold ETF assets in recent years. The four largest gold ETF managers together oversee more than Rs 1.3 lakh crore in assets under management as of May 2026.
Nippon India Mutual Fund is the largest player in the segment with around Rs 58,000 crore of gold ETF assets under management. It is followed by ICICI Prudential Mutual Fund with about Rs 26,000 crore, SBI Mutual Fund with nearly Rs 24,000 crore and HDFC Mutual Fund with approximately Rs 23,000 crore as per AMFI data.
HDFC Mutual Fund Chief Executive Officer Navneet Munot said the decision is linked to concerns around precious metal imports and their implications for India's external account. He also encouraged investors to consider allocating savings towards equity and debt mutual funds.
The move comes weeks after HDFC Mutual Fund withdrew its proposed Gold-Silver Passive Fund of Fund. The withdrawal followed Prime Minister Narendra Modi's call urging citizens to avoid excessive purchases of imported gold and instead channel savings into productive financial assets.
Concerns over gold inflows have gained prominence as India continues to be one of the world's largest importers of the precious metal. Higher gold imports can widen the current account deficit and put pressure on the country's external balances.
Gold ETFs, while financial products, ultimately require fund houses to procure physical gold to back investor units, making ETF inflows a contributor to gold demand.
According to the World Gold Council, gold ETFs witnessed net outflows of around 0.4 tonnes in May. Despite the outflows, total gold ETF holdings remained elevated at 116.3 tonnes, indicating that investors continue to maintain substantial exposure to the asset class even after some profit-booking.
The government has already sought to discourage excessive gold imports by increasing customs duty on gold and silver from 6% to 15%.
With HDFC Mutual Fund taking the first step and other AMCs reviewing similar measures, restrictions on large inflows into gold investment products could become a broader industry trend as policymakers and fund houses balance investor demand with macroeconomic considerations.
ALSO READ: HDFC MF Halts Gold ETF Investments Exceeding Rs 25 Crore; Limits FoF To Rs 10 Lakh
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
