HDFC MF to tweak Gold ETF structure from April 22: Why the shift and what investors should know

Under the revised provisions, the scheme will retain its 95–100% allocation to gold, but explicitly allow investments in gold-linked instruments, including Gold Deposit Schemes (GDS), Gold Monetisation Schemes (GMS), and exchange-traded commodity derivatives (ETCDs).

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The updated limits specify:

• Up to 50% of net assets can be deployed in such gold-related instruments
  
  Within this, GDS and GMS exposure is capped at 20%
• The remaining 0–5% allocation may include debt mutual fund units, apart from debt and money market instruments

The scheme’s total exposure across asset classes will continue to be capped at 100% of net assets.

The addendum also incorporates risk disclosures linked to commodity derivatives, covering volatility, liquidity constraints, pricing differences with physical gold, and settlement-related risks.

As required for such changes, investors are being offered a no-exit-load window till April 21. Those who do not redeem will be deemed to have accepted the revised structure.

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The changes have been approved by the AMC and trustees, and noted by Securities and Exchange Board of India.

Why the change

The notice does not state an explicit rationale but frames the revision as an update to the scheme’s investment provisions in line with permitted instruments and regulatory guidelines.

The changes align the scheme documentation with the evolving framework that allows mutual funds to access gold-linked instruments beyond physical holdings, including derivatives and monetisation schemes.

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