MUMBAI: The mutual fund industry, on verbal instructions from markets regulator Sebi on Thursday evening, stopped fresh inflows into all gold fund of funds (FoFs) that feed into gold exchange-traded funds (ETFs), effective Friday. However, all gold ETFs by these fund houses will continue to be traded on the bourses, several mutual fund officials told TOI.Currently, estimates show that the total industry size for gold ETFs is about Rs 1.7 lakh crore, of which a third of the assets are through the FoF route. “ETFs are the mother ship, FoFs feed into that,” said a top fund manager.Late on Thursday, Tata Mutual Fund said that it was putting some temporary restrictions on lump-sum purchases, new systematic investment plans (SIPs) and systematic transfer plan (STP) registrations for Tata Gold ETF Fund of Fund, effective Oct 16, 2026.The fund house also said that instalments under existing SIP/STP registrations (registered prior to the effective date) shall continue and be processed at applicable net asset value. “(During) this suspension period, redemptions, switch-out, existing systematic withdrawal plan (SWP) will continue to be permitted,” the release said. “The aforesaid suspension is temporary in nature.”Industry players feel that given the size of the gold ETF in India, about 2% of the total MF industry’s assets under management, the decision to suspend inflows into Gold FoFs cannot act as a game changer for the demand for the yellow metal in India.Of late, as govt tried to restrict gold imports which drains out precious foreign currency reserves from the country, it increased import duty on the yellow metal to 15%, from about 7-8% earlier.
