Bandhan MF adds gold, silver ETFs to equity, hybrid fund asset mix

The investable asset classes for equity schemes, which were limited to equity and short-term debt until recently, were recently expanded by the Securities and Exchange Board of India (Sebi) to include precious metal ETFs. The addition came after a strong run in gold and silver prices.

According to Sirshendu Basu, head of products at Bandhan MF, the inclusion of gold and silver ETFs is aimed at enhancing return potential while moderating volatility of the select schemes.

"The plan is to improve risk-adjusted returns. It also gives fund managers the flexibility to capture opportunities in commodities where there may not be a suitable listed equity play, allowing at least the beta return from gold and silver," he said.

The schemes for which the mandate has been added were selected on the basis of fund managers' preference and the schemes' strategies, Basu explained, adding that the provision will be used on an opportunistic basis rather than as a standard allocation.

The fund house has made other additions to its asset allocation frameworks to reduce volatility and increase income generation potential. The majority of its equity schemes have added 'covered calls' to their mandate. Several schemes have also seen the addition of infrastructure investment trusts (InvITs) to their asset mix.