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Equity MF schemes may soon be allowed to dabble in gold and silver
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Equity mutual fund (MF) schemes may soon be allowed to dabble in gold and silver, if the market regulator's new categorisation framework is finalised.
Some believe this will provide fund managers with greater flexibility to navigate market volatility during periods of uncertainty, while others argue the move could introduce complexities, particularly with respect to the comparison of scheme performance.
Currently, equity schemes must mandatorily invest 65-80 per cent of the corpus in equities. The rest can be invested in a mix of equity, debt, and Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
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So, if 93% of retail investors are losing money, who's making a profit? The answer is obvious: institutional players like Jane Street. This essentially means that the trading market has been reduced to a mechanism for transferring wealth from retail investors to the coffers of institutionalised foreign portfolio investors like Jane Street, all while SEBI stood by and did nothing. These FPIs employed some of the brightest minds in the world to develop complex algorithms and trading codes that power their operations. Since their gains are directly tied to the losses of retail investors who are often ordinary individuals with limited market knowledge, it effectively means that retail investors were unknowingly competing against highly sophisticated computer systems built by top-tier talent from India and abroad. In other words, the game was rigged from the start. The retail investor never really had a fair shot at winning. The money that was lost wasn't speculative capital from the rich. It was hard-earned money of the common Indian consisting of college funds, retirement savings, EMIs, marriage savings etc. The small investors bled, while large firms, like Jane Street, thrived. This is not all, US-based quant firm Jane Street barely had any physical presence in India, but it somehow managed to control up to 28% of our entire derivatives market on key trading days. Let that sink in. A foreign entity with no major force in India was effectively dictating the movement of India's stock indices and the regulator was sleeping. The methodology used by this rm was both simple and sinister. Jane Street was trading in both the cash market (where actual shares are bought and sold) and the derivatives market (where people bet on future price movements), using two separate companies. In the morning, one of Jane Street's entities bought a large number of bank stocks, which caused the Bank Nifty index to go up. 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