SEBI has modified the period of holding of physical commodities like gold and silver. Now, schemes investing in gold and silver through physical contracts can hold such securities for 180 days. Earlier, this limit was 30 days.
SEBI said, “No MF schemes shall invest in physical goods except in ‘gold’ through Gold ETFs. Further, as mutual fund schemes participating in exchange traded commodity derivatives (ETCDs) may hold the underlying goods in case of physical settlement of contracts, in that case mutual funds shall dispose of such goods from the books of the scheme, at the earliest, not exceeding 180 days from the date of holding of the physical goods like gold and silver.”
Chirag Mehta, Senior Fund Manager, Quantum MF said, “SEBI has done this to facilitate efficient arbitrage. Many contracts in MCX are bi-monthly i.e. 60 days. So, if a fund manager takes a delivery and wants to sell in the futures next month to play that arbitrage, he was not able to do so because he could not hold such securities for more than 30 days. The move gives adequate time to fund managers to exercise this arbitrage.”
For commodities other than gold and silver, the fund house can continue to hold commodities through physical contracts till 30 days.
