PPFAS Flexi Cap, Large Cap funds can now invest in gold, silver ETFs: What changes for investors

PPFAS Mutual Fund has revised the asset-allocation framework of five schemes, including its popular Parag Parikh Flexi Cap Fund and Parag Parikh Large Cap Fund, allowing specified portions of their portfolios to be invested in gold and silver ETFs, InvITs, domestic mutual funds and other liquid instruments.

The changes, effective August 26, also cover the Parag Parikh Arbitrage Fund, Parag Parikh ELSS Tax Saver Fund and Parag Parikh Conservative Hybrid Fund, according to a report by The Economic Times.

Parag Parikh Flexi Cap Fund

Under the revised framework, the Flexi Cap Fund can invest 65-100% in equity and equity-related instruments. The remaining 0-35% can be allocated to money-market and other liquid instruments, including gold and silver ETFs and InvITs.

The scheme can also invest 0-35% in foreign equity and related investments, including overseas ETFs and mutual funds.

This means the revised framework explicitly provides the fund with greater flexibility to use assets beyond conventional domestic equity, although the actual allocation at any given time will depend on the fund's investment strategy and market conditions.

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Parag Parikh Large Cap Fund

The Large Cap Fund will invest 80-100% in equity and related securities of large-cap companies.

The remaining 0-20% can be invested in equity and related securities of other companies, foreign companies including overseas mutual funds and ETFs, and/or money-market instruments, gold and silver ETFs, InvITs, domestic mutual funds and other liquid instruments.

The inclusion of gold and silver ETFs gives the scheme an explicitly permitted route to commodity-linked exposure within its non-core allocation.

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Changes across other PPFAS schemes

The Parag Parikh ELSS Tax Saver Fund will continue to invest 80-100% in equity and related instruments, while its 0-20% allocation can now include money-market instruments, gold and silver ETFs, InvITs, mutual funds and other liquid instruments.

For the Parag Parikh Conservative Hybrid Fund, 75-90% will be invested in money-market instruments and debt securities, while 10-25% can go into equity and equity-related instruments, including REITs. Another 0-10% can be allocated to gold and silver ETFs, gold and silver ETCDs and InvITs.

The Parag Parikh Arbitrage Fund has also received a revised allocation framework. Under normal circumstances, 65-100% can be invested in equities and equity derivatives through hedged exposure, with the remaining 0-35% in specified debt, money-market and commodity-linked instruments. Under defensive circumstances, equity and equity derivatives can fall to 0-65%, with 35-100% allocated to the other permitted instruments.

For investors, the changes primarily expand the range of instruments that the schemes are permitted to use. They do not necessarily mean that the funds will immediately increase their exposure to gold, silver or other alternatives. Investors should therefore distinguish between a permitted allocation and the fund's actual portfolio exposure.

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