Context:
In a potential shift in mutual fund regulations, the Securities and Exchange Board of India (SEBI) may soon allow equity mutual fund schemes to invest in gold and silver, as part of its proposed new scheme categorisation framework.
Key Highlights:
Proposed Change in Investment Norms
- Current Regulation: Equity MFs are required to invest 65–80% of their corpus in equities.
- Proposed Flexibility: Under the new SEBI framework, optional allocation to precious metals such as gold and silver may be permitted for fund managers.
Optional Exposure
- The exposure to gold and silver will not be mandatory; it will be discretionary, allowing fund managers to decide based on their strategy and market outlook.
- This opens new diversification avenues within equity-oriented schemes.
Implications for Fund Houses and Investors
- Fund Managers: Gain greater flexibility to hedge equity risk or enhance returns via allocation to precious metals.
- Investors: May benefit from diversified exposure within a single fund that includes both equity and precious metals.
- Could enhance the appeal of equity MFs amid market volatility or inflationary pressures.
Background
- The move is part of SEBI’s broader effort to revamp mutual fund scheme categorisation, ensuring flexibility while maintaining investor protection and clarity.
- If approved, the changes would require revisions in scheme information documents (SIDs) and investment mandates.
