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Sebi norms to judge danger worth of gold, associated devices

Sebi on Monday issued frameworks to handle the danger degree in commodity investments (gold and gold-related devices) by mutual funds. “It has been decided that investment in commodities by mutual fund schemes shall be assigned a risk score corresponding to the annualised volatility of the price of the said commodity,” Sebi mentioned in a round. The new framework will come into drive instantly.

The regulator mentioned the annualised volatility can be computed quarterly primarily based on previous 15 years’ costs of the benchmark index of the mentioned commodity. Annualised volatility of lower than 10%, 10-15%, 15-20% and greater than 20% may have danger rating of three (reasonable), 4 (reasonably excessive), 5 (excessive) and 6 (very excessive), respectively.

If value of gold has annualized volatility of 18% primarily based on value of previous 15 years, then gold and gold-related devices may have danger worth of 5 (excessive) on risk-o-meter,” Sebi defined.

On October 5, 2020, Sebi had mentioned that funding in gold and gold-related devices by schemes shall be valued at ‘moderatly-high’ danger perspective. It additionally ordered mutual funds to reveal the danger degree of schemes as on March 31 of yearly, together with variety of occasions the danger degree has modified over the 12 months, on their web sites and the Amfi web site.



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