India relaxes regulations, allowing stock funds to allocate gold and silver, with a maximum holding ratio of 35%!

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India’s securities regulator has expanded the investment scope of actively managed equity funds, allowing them to hold gold and silver assets.

On February 26, Bloomberg reported that the Securities and Exchange Board of India (SEBI) revised its rules to allow actively managed equity funds to allocate up to 35% of assets to instruments related to gold, silver, and units of infrastructure investment trusts. This expands the investment boundaries of India’s $384 billion fund market and creates a new institutional demand source for the precious metals market.

This policy adjustment comes at a time when global demand for precious metals is continuously rising. Boosted by the recent strong performance of gold prices, investor attention to gold assets has increased significantly. In January this year, the Indian domestic market saw a rare reversal, as inflows into gold ETFs surpassed those into equity funds for the first time, reflecting the growing attractiveness of gold as a safe haven asset amid rising market uncertainty.

In addition to loosening investment limits for equity funds, SEBI has also approved the establishment of a new type of lifecycle fund: target date funds. These products feature scheduled maturity periods ranging from 5 to 30 years and are primarily intended for goal-oriented investment needs such as retirement planning.

According to the new regulations, asset management companies may issue up to six actively managed lifecycle funds simultaneously. This move is expected to promote competition between the asset management industry and India’s government-led national pension system, which currently manages about $177 billion in assets.

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