The Indian mutual fund industry is discussing the viability of new products in the passive space including hybrid passive funds and more commodity exchange traded funds than the currently allowed gold and silver.
New products on the horizon
An industry participant who did not wish to be quotes said, “Hybrid passive funds may come in next year and there’s hopefully more commodity-based funds.” At the same time, he noted that product innovation in this segment will be very incremental based on what the regulations allow.
Praveena Rai, MD & CEO of Multi Commodity Exchange of India, India’s largest commodity derivatives trading exchange agreed that the exchange is working with the ecosystem to expand participation in metal contracts including ETFs. She clarified that subject to regulatory permissions and guidelines, these funds will be across non agri-commodities.
India’s passive market vs. global trends
Currently, In India commodity ETFs are and mostly focused on gold and silver and other commodity ETFs like oil and agriculture are available through international investing platforms. The current norms require a physical backing of the underlying.
Globally, some of the top traded commodity ETFs are crude oil, gold, silver, natural gas, and copper. Many investors also opt for diversified baskets that cover multiple segments like oil contracts, metals, livestock, and agriculture.