From mint · Ann Jacob · · 1m 10s
Gold FoF Investments Halted
Regulatory stop on gold FoF inflows lets investors buy ETFs directly.
In brief
Regulatory stop on gold FoF inflows lets investors buy ETFs directly. Investors can still buy gold ETFs on exchanges after mutual funds halted fresh gold FoF investments to curb rupee pressure during festivals. Originally reported by mint.
Quick answers
- Why Gold FoFs?
- Gold FoFs act as feeder pipes investing in gold ETFs with ₹500 crore-600 crore assets under management at DSP Mutual Fund.
- What is the key takeaway from Gold FoF Investments Halted?
- Investors can still buy gold ETFs on exchanges after mutual funds halted fresh gold FoF investments to curb rupee pressure during festivals.
Investment Restrictions
About 20 mutual fund houses halted fresh lump-sum investments, new SIPs and top-ups in gold FoFs following regulatory directives on 15 and 16 October.
Why Gold FoFs?
Gold FoFs act as feeder pipes investing in gold ETFs with ₹500 crore-600 crore assets under management at DSP Mutual Fund.
Regulatory Rationale
Restricting FoF inflows targets foreign exchange leakage during festive season without disrupting direct ETF investments.
Expert Clarification
Anil Ghelani confirmed restrictions apply only to gold FoFs, not gold ETFs, which remain liquid and actively traded on stock exchanges.
Festival Impact
Elevated global crude oil prices and import duties have pressured the rupee, prompting government to curb gold demand during festivals.
Investor Advice
Investors should buy gold ETFs directly or sovereign gold bonds if they need exposure, avoiding FOMO from the restrictions.
Tax Implications
Secondary-market SGB purchases now face 12.5% long-term capital gains tax, similar to gold ETFs.
The big picture
Investors can still buy gold ETFs on exchanges after mutual funds halted fresh gold FoF investments to curb rupee pressure during festivals.
