Investment on Mutual Fund concept. Coins in a jar with soil and growing plant in nature background.
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Capital markets regulator SEBI has allowed equity-oriented mutual fund schemes to invest a residual portion of their funds in gold and silver in addition to REITs and InVITs.
In the equity category schemes, mutual funds may invest residual portion in equity, money market instruments and other liquid instruments, gold and silver instruments as permitted by SEBI and in InvITs, subject to the ceilings laid out in MF regulations with respect to the respective asset class, said SEBI in a circular issued on Thursday.
At the end of January, equity funds manage assets worth ₹34.86 lakh crore.
Residual portion
SEBI has defined the residual portion as part of a scheme’s corpus not invested in its main, core asset classes as provided in the scheme characteristics.
For instance, large-cap funds have to mandatorily invest 80 per cent of the corpus in top-100 companies and the remaining residual portion of 20 per cent can now be invested in precious metals and debt instruments.
DP Singh, Deputy Managing Director & Joint CEO, SBI Mutual Fund, said allowing equity schemes to invest in gold and silver open up another asset class for fund managers.
It is good for investors as they will get to have exposure to bullion sector even while capturing the equity growth in their core portfolio.
Life cycle funds
In addition, the regulator has also opened up a new scheme category ‘Life Cycle’ funds with a clear limit on investments in equity and debt. The equity investment of the life cycle funds will be higher the debt when the investor is young.
Life Cycle scheme will follow a glide path strategy based investing across various asset classes Equity, Debt, InvITs, ETCDs, Gold and Silver ETF.
SEBI has discontinued solutions-oriented scheme category with immediate effect. Existing schemes in this category will stop all subscriptions. Existing schemes will be merged with any other scheme having similar asset allocation and risk profile with prior approval from SEBI.
Sunil Subramaniam, CEO of independent think-tank Sense and Simplicity, said life cycle funds has a prescribed equity and debt investment limit varying according to the investors age.
The regulator has also streamlined the launch of thematic funds and ensured that there are no major overlaps. The sector-based debt thematic fund will also benefit informed investors looking business-specific debt exposure, he added.
SEBI has also introduced sectoral-based debt fund with 80 per cent exposure to specific sectors.
MFs have been allowed to offer both Value and Contra funds subject to the condition that scheme portfolio overlap between the two schemes will not be over 50 per cent.
Aditya Agarwal, co-founder of Wealthy.in, a wealth management platform for MF distributors, said value and contra funds exist across different AMCs and some historical comparisons showed significant portfolio overlap in some cases — as high as 70–80 per cent — despite being distinct styles.
The capping portfolio overlap between the two at 50 per cent, will ensure clear differentiation in strategy and more meaningful product choices for investors, he added.
Published on February 26, 2026
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