Though it’s too early to conclude if fund houses will be allowed to launch commodity funds, some fund officials are hoping that the merger may possibly open gates for commodity mutual funds in India.
Finance Minister Arun Jaitley’s announcement to merge the commodity market regulator Forward Markets Commission (FMC) with capital market regulator SEBI may enable fund houses to come up with commodity mutual funds.
Commodity funds invest in food crops, spices, fibers, copper, aluminium, oil, gold, silver and platinum. In India, mutual fund houses are not permitted to invest in commodities other than gold. However, a few fund houses have thematic funds which invest in companies engaged in commodity business.
Dinesh Khara, Chief Executive Officer, SBI Mutual Fund is of the view that the proposed merger of SEBI with FMC may allow fund houses to launch commodity funds. “Fund houses may be allowed to launch commodity funds in India. It’s a positive development for the industry.”
“I do agree that if both the regulators are merged, it may open gates for commodity funds in India. However, we are awaiting further clarity on this,” said a senior official from a large fund house.
Jimmy Patel, Chief Executive Officer, Quantum Mutual Fund seconds the view, “Commodity funds are a taboo in India. Even after merger, it will take time for commodity funds to become a reality. SEBI has to set up high level committee to examine the matter first.”
“The regulations don’t permit fund houses to launch such funds. However, in future, SEBI can make an amendment to allow fund houses to launch such funds for investors having appetite to invest in commodities,” said the CEO of mid-sized company.
However, a few officials have a different view. G Pradeep Kumar, Chief Executive Officer, Union KBC Mutual Fund is skeptical about commodity funds. “Mere merger doesn’t mean that fund houses will be allowed to launch commodity funds. Mutual fund regulations don’t permit fund houses to launch such funds. Managing a commodity funds requires expertise. It’s a different domain. You need infrastructure, custodian, valuation etc.”
Dhirendra Kumar, Chief Executive Officer, Value Research seconds Pradeep Kumar’s view and said that it’s just a bureaucratic alignment.
Though it’s too early to conclude if AMCs will be allowed to launch commodity funds, some fund officials are hoping that the merger may possibly open gates for the commodity mutual funds in India.
