Three Major Mutual Funds Cap Gold ETF Investments As Government Targets Import Bill

Three of India's largest mutual fund houses have moved in quick succession to restrict bulk investments into gold exchange-traded funds (ETFs) and fund of funds (FoFs), aligning with the government's broader effort to reduce gold import dependence and ease pressure on the rupee.

HDFC Mutual Fund moved first, followed within days by ICICI Prudential Mutual Fund and then Nippon India Mutual Fund. All three cited broader economic and market conditions as the basis for their decisions.

What Each Fund House Has Restricted

HDFC Mutual Fund:

• Gold ETF: Fresh investments of ₹25 crore and above not accepted from 08 June.

• Gold ETF Fund of Fund: Lumpsum investments capped at ₹10 lakh per PAN per month from 05 June after 3 PM.

ICICI Prudential Mutual Fund:

• Gold ETF: Investments of ₹25 crore and above not accepted from 05 June after 3 PM.

Nippon India Mutual Fund:

• Gold ETF Gold BeES: Direct subscriptions above ₹25 crore not accepted.

• Gold Savings Fund: Lumpsum investments capped at ₹10 lakh per PAN per month.

• Systematic Investment Plan and Systematic Transfer Plan: Capped at ₹50,000 per PAN per day.

Systematic investment plans in the affected schemes at HDFC and ICICI Prudential remain unaffected by the restrictions.

Why This Is Happening

The moves come as the government steps up efforts to discourage gold purchases and reduce the import bill, which has been adding to pressure on the rupee amid the ongoing West Asia conflict.

Prime Minister Narendra Modi has publicly urged citizens to reduce gold consumption, and mutual funds appear to be responding to that signal by limiting the channel through which large institutional and high-net-worth flows enter gold-backed products.

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Gold ETFs in India recorded a net outflow of $61 million in May, the first monthly outflow since May 2025, reversing the $297.2 million inflow seen in April. The turnaround came after a hike in gold import duties pushed domestic prices higher, creating a profit-taking window for investors. Gold prices have now fallen for three consecutive months, down 1.7% in May, 1.1% in April and 11.6% in March.

Sources:

Times Of India

NDTV

Money Control