Precious metals are entering the equity mutual fund arena, thanks to SEBI’s bold reforms announced Thursday. Active equity schemes can now allocate to gold and silver, diversifying beyond stocks and bonds to combat volatility and inflation.
Under current norms, funds like large-cap mandates require 80% equity commitment, freeing up 20% for alternatives. SEBI’s update explicitly permits gold/silver instruments, liquid assets, and InvITs in this bucket, capped per regulations. This empowers managers to hedge against market dips using time-tested safe havens.
In a parallel shift, SEBI axes solution-oriented schemes for retirement and children, introducing Lifecycle Funds with baked-in maturities of 5-30 years. These glide-path products reduce equity exposure progressively, investing in a broad palette: equities, debt, REITs, InvITs, exchange-traded commodities, and gold/silver ETFs.
Early redemptions face steep loads—up to 3% in year one—to foster stickiness, yet offer exit flexibility. SEBI also raises the active equity/hybrid scheme limit to 12 per AMC, permitting value-contra pairs with ≤50% overlap. Thematic/sectoral funds demand 50% unique holdings versus other equity schemes (large-cap exempt).
These changes come amid mutual funds’ explosive growth, aiming to curb scheme proliferation while boosting quality. For investors eyeing long-term wealth, gold-silver access in equity wrappers and automated lifecycle strategies mark a maturing market, blending tradition with innovation.