Description

Nippon India Mutual Fund limits fresh subscriptions in Silver ETF Fund of Fund to Rs. 1 lakh per PAN per day effective October 15, 2025, due to premium in domestic silver prices caused by physical silver shortage.

Summary

Nippon India Mutual Fund has imposed subscription limits on fresh investments in Nippon India Silver ETF Fund of Fund (FOF) effective October 15, 2025. The restriction caps fresh/additional subscriptions, switch-ins, and new SIP/STP registrations at Rs. 1 lakh per PAN per day. This measure is temporary and introduced to protect investor interests amid a domestic silver shortage causing silver to trade at a premium relative to international prices, which inflates the ETF’s exchange price and consequently impacts the FOF’s valuation.

Key Points

  • Fresh/additional subscriptions and switch-ins limited to Rs. 1 lakh per PAN per day from October 15, 2025
  • New SIP and STP registrations also subject to the Rs. 1 lakh per PAN per day limit
  • Existing SIPs and STPs will continue to be executed without restrictions
  • Redemptions and switch-out requests remain unaffected
  • Restriction applies until further notice
  • Domestic silver trading at premium due to physical silver shortage in domestic market
  • Investments mandated by regulatory requirements (designated employee alignment, AMC mandatory contributions) are exempt from restrictions

Regulatory Changes

No regulatory changes introduced. This is an AMC-initiated operational measure under existing regulatory framework to protect investor interests during abnormal market conditions.

Compliance Requirements

  • Investors seeking to invest in Nippon India Silver ETF Fund of Fund must comply with the Rs. 1 lakh per PAN per day limit for fresh subscriptions
  • Distributors and intermediaries must ensure investor transactions adhere to the prescribed limits
  • Existing SIP/STP mandates continue as per original terms in the Scheme Information Document (SID)

Important Dates

  • October 15, 2025: Effective date for subscription limits
  • Duration: Until further notice from Nippon India Mutual Fund

Impact Assessment

Market Impact: Limited to investors specifically interested in silver exposure through this Fund of Fund product. The domestic silver market shortage has created pricing distortions with silver trading at a premium to international prices, making the ETF units expensive on exchanges.

Investor Impact: New and existing investors planning large lump sum investments will need to stagger purchases over multiple days. However, systematic investment plans already in place remain unaffected, maintaining investment discipline for existing investors.

Operational Impact: The AMC’s proactive measure aims to prevent potential value erosion for existing unitholders that could occur from large inflows at artificially inflated silver prices. This protects the fund from adverse selection where new investors might redeem quickly once the premium normalizes, leaving existing investors with losses.

Product Impact: The restriction affects only the Nippon India Silver ETF Fund of Fund; direct investments in the underlying Nippon India Silver ETF are not mentioned as restricted by this circular.

Impact Justification

Subscription limits affect new investors in this specific fund but existing SIPs and redemptions continue normally. Impact limited to single fund product due to temporary market conditions.