Daijiworld Media Network - Mumbai

Mumbai, Aug 31: Equity mutual fund schemes in India may soon get exposure to gold and silver as fund houses have incorporated precious metal exchange-traded funds (ETFs) into the investment framework of their active equity and hybrid schemes.

Most fund houses announced the changes through addendums last week, nearly six months after the Securities and Exchange Board of India (Sebi) permitted all non-debt active mutual fund schemes to invest in gold and silver.

The move is aimed primarily at giving fund managers greater flexibility to diversify portfolios and use precious metals when market conditions present suitable opportunities. Gold and silver exposure can provide an additional asset class alongside equities and other investments, potentially helping fund managers manage portfolio risks and diversification.

The Sebi decision in February 2026 expanded the investment universe for active equity schemes by allowing them to invest in gold and silver, subject to the applicable regulatory framework.

The latest changes mean fund managers of eligible equity and hybrid schemes will have greater scope to use gold and silver ETFs as part of their portfolio strategy rather than restricting such exposure primarily to dedicated precious-metal or multi-asset products.

The development comes as gold and silver continue to attract investor attention amid market uncertainty. ETFs provide investors with exposure to the underlying precious metals without requiring them to directly purchase and store physical gold or silver. SBI Mutual Fund, for instance, describes ETFs as baskets of securities or assets such as gold that are traded on stock exchanges.

The actual allocation to gold and silver will depend on individual schemes, their investment mandates and the decisions of fund managers. The move does not mean that all equity mutual funds will necessarily hold precious metals, but gives eligible schemes an additional tool for portfolio diversification.

Hybrid mutual funds already combine multiple asset classes, including equity, debt and gold, depending on their investment objectives.

The inclusion of gold and silver ETFs in a wider range of active schemes could therefore provide fund managers with greater flexibility to adjust asset allocation in response to changing market conditions while maintaining the primary investment objective of their respective schemes.