Sebi moves gold & silver ETF valuation to domestic spot prices from April 1

The Securities and Exchange Board of India (SEBI) has announced a significant change in the way mutual funds value physical gold and silver. Starting April 1, fund houses will use domestic spot prices published by recognised stock exchanges, replacing the long-standing practice of relying on London benchmark prices.

Domestic spot prices replace London benchmark

In a circular issued on February 26, SEBI said that gold and silver held by mutual fund schemes, including ETFs, must be valued using polled spot prices of recognised Indian exchanges. These prices are the same as those used for settling physically delivered gold and silver derivatives contracts.

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At present, the valuation is based on the AM fixing prices of the London Bullion Market Association (LBMA). Fund houses adjust these prices for currency and metric conversions, transportation costs, customs duties, taxes, levies, and any notional premium or discount to calculate domestic rates.

Closer alignment with Indian market conditions

SEBI’s move is aimed at reflecting real-time domestic market conditions in fund valuations. Experts say it will also bring greater transparency and consistency across fund houses, and reduce dependency on international benchmarks that may not always reflect local supply-demand dynamics.

Uniform policy to Be rolled out

The regulator has instructed the Association of Mutual Funds in India (AMFI) to work with SEBI to frame a uniform valuation policy. This will ensure consistent implementation across all mutual fund schemes holding physical gold and silver.

What it means

Although, the change might lead to small changes in the Net Asset Value (NAV) of some Gold and Silver ETFs, experts believe the change will ultimately benefit domestic investors by providing valuations that are more in line with Indian market realities.

SEBI overhauls fund categories

India’s mutual fund industry is headed for a major reshuffle after the Securities and Exchange Board of India rolled out a fresh set of rules that redraw how schemes are classified and run, a move aimed at pruning product clutter and making risks easier for investors to understand.

At the core of the new framework is a tighter and cleaner split between equity, debt and hybrid funds. SEBI has reworked category definitions to ensure that schemes with similar labels actually follow similar strategies. Equity funds will now operate under clearer rules for large-cap, mid-cap and small-cap segments. Multi-cap funds, which earlier had greater flexibility, will be required to keep at least 75 per cent of their assets in equities, up from the earlier 65 per cent, bringing them closer to their stated mandate.

While, debt funds are going to be categorised majorly on the basis of duration and maturity, a change that is likely to help investors better assess interest-rate risk. Hybrid funds will also see tighter regulations, with fixed equity-debt allocation bands to mainly prevent sharp and frequent changes in the portfolio mix.

In another clean-up move, SEBI has done away with the solution-oriented fund category. These schemes will stop taking fresh subscriptions with immediate effect. Existing schemes will eventually be merged with comparable offerings in other categories, reducing the number of overlapping products in the market.