Gold, Silver ETF Rule Changes: How Does It Affect Your Portfolio, Returns

The Securities and Exchange Board of India (Sebi) has changed rules on the domestic valuation of gold and silver exchange-traded funds (ETFs), effective April 1, 2026. The key shift is the transition of gold and silver ETFs to spot prices on domestic exchanges from global benchmarks earlier, which could impact the valuations of gold and silver ETF portfolios.

Previously, ETFs were linked to the London Bullion Market Association (LBMA) AM filix rates, which had to be adjusted for currency fluctuations, import duties, taxes, and other logistical expenses to arrive at domestic prices. This process consisted of several layers, which often led to minor inefficiencies and changes in valuation. Sebi has now changed the benchmark directly to spot prices published by recognised Indian stock exchanges, which is expected to eliminate these multiple adjustments required earlier, and in turn, improve efficiency.

How Will It Impact Investments

The changes in ETF valuation rules will enhance transparency for investors and reduce valuation differences across different gold and silver ETFs. Comparability of different products will also become easier since all domestic fund houses will now require following a uniform valuation framework. Investors will also be able to easily compare different schemes based on their actual performance metrics instead of the differences in valuation practices.

The new system will ensure that ETF prices reflect domestic demand-supply dynamics in a better manner. ETF valuations will become more relevant for domestic investors as they will show the currency movements and import duties in a better way.

However, the fundamental factor for returns in an ETF remains unchanged with the underlying gold and silver prices being the key drivers, even as the precision in calculation of net asset values (NAVs) of ETFS is set to improve under the new framework. This will also reduce small pricing mismatches between ETFs and physical gold and silver prices. In the long term, this will also ensure that ETF performances mirror physical bullion prices more closely.

A uniform spot-price based method to value ETFs is also expected to reduce discrepancies across gold and silver ETFs that existed due to varying valuation practices. Valuations and pricing of different schemes are expected to become more consistent with the changes in framework.