HDFC Mutual Fund has announced temporary restrictions on fresh lump-sum investments into its HDFC Gold ETF and HDFC Gold ETF Fund of Fund (FoF) schemes. The fund house cited prevailing economic and market conditions as the primary reason for these new limitations, which come into effect between June 5 and June 8, 2026, depending on the specific scheme, and will remain active until further notice.
Restrictions on Gold ETF Investments
For the HDFC Gold ETF, direct subscription transactions from large investors will no longer be accepted starting June 8, 2026. This restriction specifically targets transactions of ₹25 crore or more, typically undertaken by institutional investors and significant market participants. However, the fund house clarified that these changes do not affect investors buying or selling ETF units on stock exchanges.
Monthly Cap on Gold FoF Investments
HDFC Mutual Fund has also introduced limits on investments into the HDFC Gold ETF Fund of Fund, a scheme designed to provide investors with exposure to gold through a mutual fund structure. Under the revised guidelines, lump-sum purchases and switch-in transactions will be capped at ₹10 lakh per PAN per calendar month. This cap is calculated at the first-holder level and applies to all transactions received after the cut-off time of 3:00 PM on June 5, 2026. All other terms and conditions of the schemes remain unchanged.
Broader Context: Precious Metal Imports and Policy Focus
This decision by HDFC Mutual Fund follows its earlier move last month to defer the launch of its HDFC Gold-Silver Passive Fund of Fund. At that time, the fund house linked its decision to increasing policy discussions surrounding precious metal imports and their implications for India's external account balance. Navneet Munot, Managing Director and CEO of HDFC AMC, had emphasized the national conversation around these imports and encouraged investors to consider equity and debt mutual funds that contribute to India's productive capacity.
The developments align with renewed government focus on India's gold imports, especially after recent adjustments to customs duty structures. Effective May 13, the revised framework includes a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold imports. These changes partially reverse earlier import duty reductions from the 2024-25 Union Budget, which were intended to support the gems and jewellery industry, lower domestic prices, and combat smuggling.