Kamal Ghorui
Capital markets regulator Securities and Exchange Board of India (Sebi) on Thursday revised the valuation methodology for physical gold and silver held by mutual fund schemes, mandating the use of polled spot prices published by recognised stock exchanges for determining their value.The new framework will come into effect from April 1, 2026.“It has been decided that with effect from April 01, 2026… the mutual funds shall value physical gold and silver by using the polled spot prices published by the recognised stock exchanges which are used for settlement of physically delivered gold and silver derivatives contracts,” Sebi said in its circular.
Shift from LBMA benchmark to domestic spot prices
Currently, gold and silver exchange traded funds (ETFs) value their holdings based on the AM fixing prices of the London Bullion Market Association (LBMA). These prices are then adjusted for currency conversion, transportation costs, customs duty, taxes and other levies to arrive at domestic valuations.Under the revised norms, the spot prices used for settlement of physically delivered bullion derivatives contracts on Indian stock exchanges will form the basis for pricing such holdings, replacing the earlier benchmark-linked approach, reported news agency PTI.The move, aligned with the Sebi (Mutual Funds) Regulations, 2026, aims to ensure that valuations better reflect domestic market conditions while promoting uniformity and transparency across mutual fund schemes.The Association of Mutual Funds in India (Amfi), in consultation with Sebi, will prescribe a uniform policy for implementation of the revised valuation methodology.
Part of broader mutual fund reforms
The revision comes alongside Sebi’s broader overhaul of the mutual fund framework.In a separate circular issued on Thursday, the regulator introduced a revamped classification structure for mutual fund schemes, dividing them into five broad categories — equity, debt, hybrid, life cycle and other schemes, along with Fund of Funds (FoFs) and passive schemes such as Index Funds or ETFs.“For easy identification by investors, in order to bring uniformity in names of schemes for a particular category across mutual funds and to ensure that schemes remain ‘true to-label’, the scheme name shall be the same as the scheme category,” Sebi said.It also directed that “words/ phrases that highlight/ emphasize only the return aspect of the scheme shall not be used in the name of the scheme.”The regulator has discontinued the Solution Oriented Schemes category with immediate effect. Existing schemes under this category will stop accepting fresh subscriptions and merge with similar schemes, subject to prior Sebi approval.Additionally, Sebi introduced Life Cycle Funds as open-ended schemes with pre-determined maturity and a glide path strategy for goal-based investing. These funds will progressively reduce equity exposure and increase debt allocation as they approach maturity.Sebi has also tightened portfolio overlap disclosures, mandating mutual funds to publish category-wise overlap levels every month on their websites, calculated at the ISIN level.All existing schemes will have to comply with the revised framework within six months of the issuance of the circular.With the new valuation norms for gold and silver and the wider restructuring of scheme categories, Sebi aims to enhance transparency, standardisation and investor protection in the mutual fund industry.
