REGULATORY · COMPETITIVE · INDIA
India mutual fund rules: higher gold/silver limits for equity schemes and new life-cycle fund category
Change
Sebi revised mutual fund rules to let actively managed equity schemes invest up to 35% of assets (after core equity requirements) in gold/silver instruments and certain other assets, while also tightening scheme classification norms and approving a new life-cycle/target-date fund category with 5–30 year maturities.
Why it matters
Sebi’s change expands what actively managed equity schemes can hold in their residual (non-core) allocation, allowing up to 35% in gold and silver instruments and units of infrastructure investment trusts, beyond traditional money-market/liquid holdings. Hybrid funds are also permitted to invest in gold and silver ETFs, formalizing precious-metals exposure within non-commodity scheme types while keeping primary mandates intact. Separately, Sebi introduced a new life-cycle (target-date) fund category with predefined maturities from 5 to 30 years, with AMCs allowed up to six active life-cycle funds at a time. Life-cycle funds can invest up to 10% in gold/silver ETFs, exchange-traded commodity derivatives, and InvITs. Alongside these product/asset-allocation changes, Sebi implemented a classification overhaul intended to reduce portfolio overlap and enforce “true-to-label” scheme behavior, altering compliance and product taxonomy constraints for fund houses.
Implications
- • Equity schemes’ allowable non-core allocation now includes up to 35% gold/silver/InvITs.
- • Hybrid schemes gain explicit permission to hold gold and silver ETFs.
- • New life-cycle fund category adds 5–30 year maturity products with capped metals exposure.
- • Classification overhaul increases constraints on scheme labeling and portfolio overlap.
Who is affected
- • Asset management companies (mutual fund sponsors) offering equity, hybrid, and target-date products
- • Mutual fund portfolio managers of actively managed equity and hybrid schemes
- • Gold and silver ETF/linked-instrument issuers and market makers
- • Infrastructure Investment Trusts (InvITs) and related capital-raising participants
Source
Topics
World & Politics Policy & Regulation Finance & Banking Capital Markets Financial Services