India’s market regulator SEBI has mandated fresh valuation rules for physical gold and silver held by mutual fund schemes. By shifting to domestic spot prices and standardizing valuation practices, the move enhances transparency, ensures fair pricing, and strengthens investor confidence in precious metal-linked mutual fund products.
The Securities and Exchange Board of India (SEBI) has announced updated guidelines for valuing physical gold and silver in mutual fund schemes. This regulatory change is designed to align valuations with Indian market realities, reduce discrepancies across funds, and protect investors amid growing interest in precious metals as portfolio diversifiers.
Key Highlights
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Domestic Benchmarking: Valuations must now be based on Indian spot market prices rather than international benchmarks like LBMA.
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Standardized Practices: Asset Management Companies (AMCs) are required to adopt uniform valuation methods, ensuring consistency across schemes.
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Investor Safeguards: The rules aim to protect investors by preventing mispricing and enhancing transparency.
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Diversification Flexibility: Equity funds can allocate up to 35% of their portfolios to gold and silver instruments, offering broader diversification.
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Industry Impact: The move is expected to boost trust, simplify compliance, and potentially increase inflows into gold and silver ETFs.
This step underscores SEBI’s commitment to modernizing India’s mutual fund industry, balancing global standards with domestic market needs.
Sources: SEBI Circulars, The Hindu BusinessLine, Zee Business