New gold ETF pricing plan splits industry

Sebi seeks to replace the long-used London Bullion Market Association benchmark with domestic prices

- Neha Joshi & Dipti Sharma

India's markets regulator is preparing a sweeping change in how gold and silver exchange-traded funds (ETFs) are valued, a move that could alter pricing norms for a fast-growing segment of the country's mutual fund industry.

The Securities and Exchange Board of India (Sebi) has proposed replacing the long-used London Bullion Market Association benchmark with domestic spot prices, aiming to simplify fund valuation and better align it with local market dynamics.

The proposal, laid out in a 16 July consultation paper, has drawn cautious support and scepticism from the industry.

Assets under management in Indian gold ETFs stood at ₹64,777 crore ($7.5 billion) as of June, up 89% from a year earlier, according to data from the Association of Mutual Funds in India (Amfi).

Net inflows jumped 613% in June from May, reaching ₹2,081 crore—the highest in five months.

At the heart of the overhaul is an attempt to standardize how net asset values (NAVs) are calculated by fund houses.

Today, ETF NAVs are based on LBMA reference prices, converted to rupees and adjusted for import duties and domestic premiums.

"However, this method varies across AMCs—some adjust daily, others weekly or monthly—creating inconsistencies," said Radhika Gupta, managing director and CEO, Edelweiss Asset Management Co. (AMC).