MUMBAI: Mutual fund (MF) houses are restricting large inflows into gold exchange-traded funds (ETFs) and funds of funds (FoFs) that fuel such schemes in order to align with the government’s recent policy of discouraging people from buying gold.Three large investment houses – HDFC MF, ICICI Prudential MF and Nippon India MF – have restricted large inflows into gold funds. The decisions will come into effect between June 5 and 8. “In view of the broader economic and market conditions, it has been decided to temporarily restrict lump sum subscriptions to the HDFC Gold ETF and the HDFC Gold ETF until further notice,” a letter from the fund house said.Similar communications, in the form of an addendum to the Scheme Information Document (SID), have been issued by ICICI Prudential MF and Nippon India Mutual Fund.After Prime Minister Narendra Modi urged people to buy less gold, the government increased import duty on the metal to 15% from 6%. Gold is one of India’s largest imported items. In fiscal year 2026, the total value of gold imported into the country reached $72 billion, an increase of 24% year-on-year.
All three fund houses said that large investors who buy gold ETFs directly from fund houses worth at least Rs 25 lakh crore will not be allowed to do so. The fund houses also said that aggregate purchases and transfers to FoFs will be processed only up to a maximum of Rs 10 lakh per PAN per calendar month.Nippon Life said in its letter that the Rs 25 lakh crore restriction will not apply to authorized participants and market makers. This means that individual investors in gold funds will not be bothered by this move. The fund house also said that SIPs in gold FoFs will continue with the upper limit set at Rs 50,000 per PAN per day.