The Securities and Exchange Board of India (SEBI) has issued a circular saying that investments in such commodities by mutual funds will be given a risk score. This score will be determined on the basis of annual fluctuations in the prices of these commodities.
New Delhi . The stock market regulator SEBI has issued a new guideline to assess the risk in gold and gold-related investment instruments. Mutual fund companies invest in them. According to the new guideline, now mutual funds can invest in them by looking at their risk score.
The Securities and Exchange Board of India (SEBI) has issued a circular saying that investments in such commodities by mutual funds will be given a risk score. This score will be determined on the basis of annual fluctuations in the prices of these commodities.
There will be four levels of risk
SEBI has said in its circular that the annual fluctuation in the price of the commodity will be calculated on a quarterly basis on the prices of the standard index of the commodity for 15 years. For this the risk will be divided into four levels. These levels will range from ‘medium’ to ‘very high’.
This is how the level of risk will be decided
According to SEBI, the risk score of that commodity will be kept as ‘moderate’ if the annual volatility is less than 10 per cent. Whereas if there is a fluctuation of 10-15 per cent, the score will be ‘More than Moderate’ and if it is 15-20 per cent, it will be ‘high’. Fluctuations above 20 percent will give the score ‘Very High (Very High)’. 3 scores will be given to medium, 4 to medium, 5 to high and 6 to very high.
Earlier in October 2020, SEBI had said that investments of mutual fund companies in gold and gold-related investment instruments will be considered as four from a risk perspective. SEBI’s new guidelines on risk assessment have come into force with immediate effect.
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