Gold funds paused new money before Diwali. What still works if you want gold
Several fund houses stopped fresh investments into their gold fund-of-funds on 16 October 2026. Existing SIPs and redemptions continue, and gold ETFs still trade. Here is what changed and how the routes to gold compare.
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On 16 October 2026 several mutual fund houses stopped taking fresh money into their gold fund-of-funds (FoFs), the funds that hold a gold ETF on your behalf so you do not need a demat account. Reports name Kotak, UTI and HDFC, with Tata, DSP and ICICI Prudential also reported to have restricted inflows. The pause reportedly followed discussions with SEBI and is framed as cooling festive-season demand, at a time when high oil prices and a larger import bill are pressing on the rupee.
What changed, and what did not
| Status from 16 October | |
|---|---|
| New lump-sum investments in gold FoFs | Paused at the fund houses named |
| New SIP registrations in gold FoFs | Paused |
| Existing gold FoF SIPs | Continue |
| Redemptions from gold FoFs | Unaffected |
| Gold ETFs on the exchange | Trading as usual |
Reports differ on scope: some describe limits on bulk ETF subscriptions at the fund house, others only on FoF purchases. Each fund house’s notice is the authority, and the restrictions may be lifted or changed.
The demand behind it
Gold ETFs took in ₹4,450.61 crore in September 2026, up from ₹2,596.7 crore in August, according to AMFI data. Gold ETFs traded higher on the day the curbs began, with spot gold around $4,178 an ounce.
How the routes to gold compare
| Route | Needs | Long term after | Tax on long-term gain |
|---|---|---|---|
| Gold ETF | Demat and broking account | 12 months | 12.5% |
| Gold fund-of-fund | Mutual fund account only | 24 months | 12.5% |
| Physical gold (coins, bars, jewellery) | Storage, purity checks | 24 months | 12.5% |
Short-term gains on all three are taxed at your slab rate. A FoF charges its own expense ratio on top of the ETF it holds, so for the same gold the ETF route is usually cheaper; the FoF’s advantage is that it needs no demat account and can run as a SIP.
What to check if you hold or want gold
- Your existing SIPs: they continue, so nothing needs to change for money already flowing in.
- Your gold share: counting jewellery, gold ETFs and FoFs together often shows more gold than people expect. Our piece on household gold shows how much uncounted jewellery can shift a large portfolio.
- Buying ETFs on the exchange: the price you pay can differ slightly from the fund’s value per unit; the fund house publishes an indicative value during market hours to compare against.
Questions
- Can I still invest in gold mutual funds?
- New lump sums and new SIP registrations in gold fund-of-funds are paused at several fund houses from 16 October 2026. Existing SIPs continue, and you can buy gold ETFs on the exchange with a demat account.
- Can I redeem my gold fund-of-fund?
- Yes. Redemptions are not affected by the pause.
- What is the difference between a gold ETF and a gold fund-of-fund?
- A gold ETF trades on the exchange and needs a demat account. A gold FoF is a mutual fund that holds a gold ETF for you, needs only a mutual fund account, can run as a SIP, and charges its own expenses on top of the ETF’s.
- How are gold ETFs and gold FoFs taxed?
- Long-term gains are taxed at 12.5%: after 12 months for gold ETFs and after 24 months for gold FoFs and physical gold. Short-term gains are taxed at your slab rate.
- How much went into gold ETFs in September 2026?
- ₹4,450.61 crore, up from ₹2,596.7 crore in August, according to AMFI data.
Sources
- Business Today: Gold mutual funds halt fresh investments ahead of festive season
- investingLive: India curbs gold ETF buying before Diwali
- Whalesbook: Gold ETFs gain despite new restrictions on fund-of-funds
- Whalesbook: Gold rises 0.2% as dollar eases, ETF subscriptions halted
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
