HDFC Asset Management Company (AMC) has stopped accepting fresh investments in its Gold & Silver Fund, putting a temporary brake on new money flowing into the commodity-focused scheme even as existing investors continue to remain invested.
The move applies to both fresh lump-sum investments and new SIP registrations. However, investors who have already enrolled for SIPs can continue their contributions as scheduled.
The affected scheme manages assets worth about Rs 1,250 crore, making it a relatively small fund within HDFC AMC’s overall asset base of nearly Rs 6.8 lakh crore.
Fresh inflows paused
The fund, which offers exposure to both gold and silver, was earlier open to all categories of investors. With the latest decision, no new subscriptions will be accepted until further notice.
While the fund house has not publicly detailed the reasons behind the move, industry participants believe it could be linked to portfolio management considerations amid heightened volatility in precious metals.
The scheme maintains a roughly equal allocation between gold and silver-related investments, making it more sensitive to fluctuations in commodity prices than conventional mutual funds.
Existing investors can stay invested
Importantly, the restriction does not affect existing unitholders.
Investors who already hold units in the scheme can continue with their investments, while previously registered SIPs will remain active. Redemption and withdrawal facilities are also expected to continue as normal.
Such restrictions are not unusual in the mutual fund industry and are often used by fund houses to manage fund size, liquidity, portfolio construction or tracking efficiency.
Commodity funds gain popularity
The development comes at a time when commodity-linked investment products have attracted increasing investor interest.
Gold funds have benefited from rising demand for safe-haven assets, while silver has emerged as a preferred play on industrial growth and clean-energy themes. However, silver prices tend to witness sharper swings than gold, making portfolio management more challenging.
Fund managers often have to deal with issues such as tracking error, liquidity management and market volatility, particularly when inflows rise rapidly.
Limited impact on HDFC AMC
Market experts do not expect the decision to have any meaningful impact on HDFC AMC’s earnings or business outlook.
With assets of around Rs 1,250 crore, the Gold & Silver Fund accounts for less than 0.2 per cent of the fund house’s total assets under management.
The company recently reported strong financial performance, supported by steady SIP inflows and continued growth in its distribution network.
Broader industry signal?
The decision is also being viewed as a sign that asset managers may become more selective in managing niche commodity products as investors increasingly allocate money to alternative asset classes.
Over the last few years, mutual fund houses have launched several commodity and multi-asset products to cater to demand beyond traditional equity and debt schemes.
Some market participants believe the suspension could eventually lead to changes in the structure of the fund or a shift towards broader multi-asset offerings, though HDFC AMC has not announced any such plans.
For now, the focus remains on existing investors, who will continue to have access to the scheme without any change in their holdings or SIP investments.
