Description

Nippon India Mutual Fund limits fresh subscriptions in Silver ETF Fund of Fund to Rs. 1 lakh per PAN per day due to premium in domestic silver prices caused by physical silver shortage.

Summary

Nippon India Mutual Fund has imposed subscription limits on the Nippon India Silver ETF Fund of Fund effective October 15, 2025. Fresh subscriptions, additional purchases, switch-ins, and new SIP/STP registrations are capped at Rs. 1 lakh per PAN per day. This restriction is implemented due to a shortage of physical silver in the domestic market causing silver to trade at a premium relative to international prices, which inflates the ETF price on exchanges and impacts FOF valuation. The measure aims to protect investor interests during the current market scenario.

Key Points

  • Subscription limit of Rs. 1 lakh per PAN per day imposed on fresh/additional investments
  • Applies to direct subscriptions, switch-ins, and new SIP/STP registrations
  • Existing SIPs, STPs, and redemption/switch-out requests remain unaffected
  • Restriction due to domestic silver shortage causing premium pricing versus international markets
  • Temporary measure effective October 15, 2025 until further notice
  • Regulatory mandated investments (designated employee alignment and AMC contributions) exempted from restrictions

Regulatory Changes

No regulatory framework changes. This is an AMC-initiated investor protection measure under existing regulations allowing fund houses to limit subscriptions to protect existing unitholders’ interests during adverse market conditions.

Compliance Requirements

  • Distributors and investment platforms must enforce Rs. 1 lakh per PAN per day limit on fresh subscriptions
  • Limit applies across all transaction modes (direct, switch-ins, new systematic plans)
  • Existing systematic plans must continue without disruption
  • Regulatory mandated investments must be processed without restrictions
  • Investors must be informed of the temporary nature of restrictions

Important Dates

  • Effective Date: October 15, 2025
  • Duration: Until further notice from Nippon India Mutual Fund

Impact Assessment

Market Impact: Limited to investors in Nippon India Silver ETF Fund of Fund. The restriction prevents new large subscriptions that could exacerbate valuation issues caused by the domestic silver premium. Investors seeking silver exposure above Rs. 1 lakh per day will need alternative investment routes.

Investor Impact: Protects existing unitholders from dilution during unfavorable pricing conditions. New investors face daily investment limits but can still participate through systematic plans or multiple transactions over time. Existing SIP/STP investors unaffected.

Operational Impact: Fund house must monitor daily subscription limits per PAN. The domestic silver shortage and resulting price premium create valuation challenges for silver-backed investment products. Restriction may remain in place until domestic silver supply stabilizes and price premium normalizes relative to international markets.

Impact Justification

Subscription restrictions on a specific mutual fund scheme due to market conditions. Protects existing investors but limits new investment options. Does not affect broader market operations or existing SIPs/STPs.