Mutual funds diversify equity portfolios with precious metal ETFs

Mutual fund managers across India are beginning to integrate gold and silver ETFs into their equity portfolio structures following updated norms from market regulators. The move represents a strategic diversification effort that allows fund houses to broaden their asset allocation strategies while maintaining their core equity mandates.

According to mutual fund officials, the regulatory framework modifications have created flexibility for schemes to include precious metal investments as part of their overall portfolio mix. However, executives have tempered expectations about the pace of implementation, noting that any additions are likely to be measured and gradual rather than substantial in the near term.

The incorporation of gold and silver ETFs into equity schemes reflects a broader industry trend toward flexible portfolio construction. Gold and silver have historically served as portfolio hedges, and their inclusion in equity-focused funds may help reduce overall portfolio volatility while maintaining exposure to market growth.

Fund managers indicated that actual portfolio allocations would depend on individual scheme objectives, market conditions, and perceived value in precious metals at any given time. The regulatory changes appear designed to give asset managers greater discretion in constructing diversified portfolios that better serve investor needs across varying market cycles.