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SEBI allows mutual funds in ETCDs

Date: 23 May 2019 Tags: World Economy
  • Securities and Exchange Board of India (SEBI) has allowed mutual funds to participate in exchange-traded commodity derivatives (ETCD).
  • They are permitted to participate in ETCDs through hybrid schemes, which include multi-asset scheme and gold ETFs.
  • However, SEBI has decided to keep away MFs from trading in derivatives of sensitive commodities. Thus, mutual fund schemes cannot invest in physical goods except in ‘gold’ through ETFs.
  • Moreover, Mutual fund schemes can participate in ETCDs of particular goods (single), not exceeding 10% of net asset value of the scheme.
  • However, this limit of 10% is not applicable for investments through gold ETFs in ETCDs having gold as underlying.