India’s mutual fund industry is set to witness an important regulatory update from April 1, 2026. The change primarily affects how gold and silver mutual funds and exchange-traded funds (ETFs) calculate their Net Asset Value (NAV). Announced by the Securities and Exchange Board of India, the revised framework aims to enhance transparency and ensure that commodity-based schemes reflect domestic market realities more accurately.

Here’s a detailed look at what is changing and how it could impact investors.

SEBI Updates Gold and Silver Pricing Method

Until now, many gold and silver mutual funds relied on global benchmark prices set by the London Bullion Market Association to determine their NAV. These international prices were then adjusted to align with Indian market conditions.

However, starting from the new financial year, fund houses will shift to using spot prices from India’s domestic bullion market for valuation purposes. This means that gold and silver mutual fund schemes will now be priced based on actual Indian market rates rather than overseas benchmarks.

The move is designed to make valuations more transparent and closely linked to local supply-demand dynamics.

Why This Change Is Significant

The primary objective behind the new rule is to increase clarity and investor confidence. Commodity-based mutual funds have witnessed growing interest in recent years, especially amid rising gold and silver investments in 2025.

By aligning NAV calculations with domestic spot prices, the regulator intends to:

• Improve accuracy in pricing

• Reduce dependency on global benchmarks

• Eliminate complex price adjustments

• Ensure better reflection of Indian market trends

This shift is expected to strengthen trust in gold and silver mutual fund schemes by offering investors a clearer understanding of how their investments are valued.

What Determines Domestic Spot Prices?

Unlike global benchmarks, Indian bullion prices are influenced by several local factors. These include:

• Foreign exchange rates

• Import duties and customs charges

• Transportation and logistics costs

• Applicable taxes and levies

Since India is one of the largest importers of gold and silver, fluctuations in the rupee-dollar exchange rate significantly impact domestic prices. By basing valuations on Indian spot prices, fund NAVs will better reflect these real-world factors.

Simplified Valuation Framework

Under the revised system, mutual funds will adopt spot prices used for settling gold and silver derivative contracts in Indian markets. These prices follow SEBI’s established spot polling guidelines.

This eliminates the earlier requirement of adjusting global benchmark prices to match Indian conditions — a process that could sometimes create complexity in pricing calculations.

The new approach is expected to make fund valuation:

• More straightforward

• Consistent across schemes

• Easier for retail investors to understand

Industry Consultation Behind the Decision

The decision to transition away from London-based benchmarks was not made abruptly. It followed extensive discussions within SEBI’s Mutual Fund Advisory Committee. After reviewing market practices, the committee concluded that spot prices published by regulated Indian stock exchanges meet high transparency and compliance standards.

The regulator believes domestic pricing mechanisms are reliable enough to serve as the primary reference for gold and silver fund valuations.

Implementation Under SEBI Mutual Fund Regulations 2026

The revised pricing mechanism will be introduced under the SEBI Mutual Fund Regulations 2026. To ensure smooth implementation, the Association of Mutual Funds in India (AMFI) will coordinate with SEBI to develop uniform guidelines for all fund houses.

This coordinated effort aims to maintain consistency across the industry and prevent discrepancies in pricing practices.

What This Means for Investors

For investors holding gold or silver mutual funds and ETFs, the change does not alter the nature of their investments. Instead, it modifies the way fund values are calculated.

Key takeaways for investors:

• NAVs will now reflect Indian spot market prices.

• Pricing may align more closely with domestic bullion trends.

• Greater transparency in valuation methodology.

• Reduced reliance on international benchmarks.

Overall, the reform signals a broader push toward strengthening India’s financial ecosystem through regulatory clarity and investor-focused reforms.

The updated valuation rules represent a significant step toward improving transparency in commodity-based mutual funds. By linking gold and silver fund pricing directly to domestic spot rates, SEBI aims to create a more accurate and investor-friendly framework.

As India’s mutual fund industry continues to grow, such regulatory refinements are expected to enhance trust, consistency, and long-term stability in the market.

Disclaimer: This article is for informational purposes only. Investors should review official regulatory notifications and consult financial advisors before making investment decisions.