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Sebi has issued a measure for mutual funds to participate in commodity derivatives like gold, silver, crude, copper, guar, Mentha etc. However, as per the norm, Mutual Funds will not be allowed to take positions in sensitive commodities like agricultural products.
As per the circular released by Sebi, Mutual Funds can participate in gold derivatives only through Gold exchange traded funds launched by asset management companies (AMCs) and in other commodity derivatives through hybrid schemes, which currently invest in equity, debt and gold, with effect from May 21, 2019. The circular further mentioned that Mutual Funds should not hold any physical goods for more than 30 days since they first take delivery and no Mutual fund schemes shall invest in physical goods except in gold. In addition, mutual fund 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.