HDFC Mutual Fund has proposed changes to the investment structure of its HDFC Gold ETF, categorised as a fundamental attribute change, with effect from April 22.
Under the revised provisions, the scheme will retain its 95–100% allocation to gold, while allowing investments in gold-linked instruments such as Gold Deposit Schemes (GDS), Gold Monetisation Schemes (GMS), and exchange-traded commodity derivatives (ETCDs).
The framework caps total exposure to such instruments at 50% of net assets, with a 20% sub-limit for GDS and GMS. The remaining 0–5% allocation may include debt mutual fund units, apart from debt and money market instruments. Overall exposure across asset classes will remain capped at 100% of net assets.
The addendum also introduces risk disclosures related to commodity derivatives, including volatility, liquidity constraints, pricing differences with physical gold, and settlement risks.
In a clarification issued on March 24, the fund said the provision to invest in ETCDs is only an enabling measure and not part of the scheme’s regular strategy. It added that such exposure would be used only in rare instances, such as temporary constraints in buying or selling physical gold, and would be unwound once market conditions normalise.
The fund said the scheme will continue to invest in physical gold to the maximum extent possible, with physical holdings accounting for about 98.65% of assets as of February 28.
As required for such changes, investors have been offered a no-exit-load window till April 21, failing which they 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 specify a rationale but presents the revision as an update to align with permitted instruments and regulatory provisions, enabling limited use of gold-linked avenues beyond physical holdings.
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First Published: Mar 24, 2026 9:23 AM IST
