Equity Funds Can Now Invest in Gold & Silver ETFs in India

Indian equity mutual fund schemes are now permitted to directly invest in gold and silver Exchange Traded Funds (ETFs). This significant shift follows recent announcements by most fund houses, updating their investment frameworks.

The regulatory foundation for this change was laid in February 2026 by the Securities and Exchange Board of India (Sebi). Sebi’s decision specifically allowed all non-debt active mutual fund schemes to incorporate precious metals into their investment portfolios.

Expanding Investment Horizons

This regulatory update primarily aims to provide fund managers with enhanced flexibility for portfolio diversification. They can now strategically utilize gold and silver during opportune market conditions to potentially mitigate portfolio risks.

Sebi’s move effectively expanded the investment universe for active equity schemes, allowing direct inclusion of gold and silver. Fund managers of eligible equity and hybrid schemes are no longer restricted to dedicated precious-metal products for such exposure.

Strategic Allocation of Precious Metals

The timing of this change is particularly relevant given the sustained investor interest in gold and silver amidst prevailing market uncertainties. ETFs offer a convenient mechanism for investors to gain exposure to these underlying assets.

Investing through ETFs avoids the logistical challenges and costs typically associated with directly purchasing and storing physical gold or silver. This accessibility streamlines the process for incorporating precious metals into diversified portfolios.

It is important to understand that the actual allocation to gold and silver will not be uniform across all schemes. Instead, these decisions will be guided by the specific investment mandates of individual schemes and the strategic judgment of their respective fund managers.

While hybrid mutual funds already incorporate various asset classes, including gold, the broader inclusion of gold and silver ETFs across a wider range of active schemes provides greater agility. Fund managers can now adjust asset allocation more flexibly in response to evolving market dynamics, always adhering to their primary investment objectives.