Bandhan Mutual Fund Allows Gold, Silver ETFs in Equity Schemes
Why in the news
Bandhan Mutual Fund became an early user of newly widened SEBI rules that let equity and hybrid schemes hold precious metals. It revised the mandates of three funds to include gold and silver.
Key facts
- Funds changed: Smallcap, Flexicap and Aggressive Hybrid.
- Limit: up to 10% in gold and silver ETFs.
- Optional: managers decide, so the room can be used to hedge or capture commodity gains when equities look stretched.
- Beta return: exact market-linked movement of an asset, here gold prices, without choosing mining stocks.
New allocation (Smallcap and Flexicap)
| Asset class | Range |
|---|---|
| Equity and equity-related | 65% to 100% |
| Debt securities or cash | 0% to 35% |
| InvIT units | 0% to 10% |
| Gold or silver ETFs | 0% to 10% |
Background
- Earlier, equity funds were limited to stocks and short-term debt; now commodity exposure comes through ETFs.
- Why precious metals: they often move opposite to equities, so they can lift risk-adjusted returns when markets fall on tension or inflation.
- InvITs: pooled vehicles that invest in finished, revenue-earning infrastructure such as toll roads, offering steady cash flow.
- Covered call: hold a stock and sell a call option on it; the premium earned cushions small dips.
Exam angle
- Regulator: SEBI; instrument: gold and silver ETFs; cap: 10%.
- Terms: beta return, negative correlation, InvIT, covered call.