SEBI allows equity mutual funds to invest up to 35% in gold & silver

The Securities and Exchange Board of India (SEBI) has allowed actively managed equity mutual funds to invest part of their residual allocation in gold and silver instruments.

The limit is up to 35% of assets and also includes units of infrastructure investment trusts.

This expands the range of non-equity assets available to fund managers.

Under the revised framework, equity schemes can deploy surplus allocations beyond core equity exposure into precious metals.

These investments will typically be made through ETFs or related instruments. Earlier, this portion of the portfolio was largely parked in cash, liquid securities, or money-market instruments.

The change gives fund managers an additional tool to manage volatility and diversify portfolios.

Gold is widely used as a hedge during market stress. Silver offers both safe-haven characteristics and exposure to industrial demand.

Media reports suggest that most funds are expected to use this newly granted flexibility selectively. Allocations to metals are likely to remain small and tactical.

As a result, the overall risk'return profile and equity orientation of most schemes is unlikely to change materially.

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