Kotak AMC's Nilesh Shah has urged SEBI to introduce new mutual fund structures, including gold-linked options and dedicated REIT funds, to help retail investors channel savings into financial assets. These proposals come as gold ETF inflows slowed significantly in July 2026 amid market volatility.
Kotak Asset Management Company MD Nilesh Shah recently proposed several new mutual fund product structures to the Securities and Exchange Board of India (SEBI) aimed at moving household savings from physical assets into the financial system. Speaking at the FICCI Annual Capital Markets Conference, Shah emphasized the need for financial products that cater to the large portion of retail wealth currently held in cash and physical gold.
One of the key proposals involves creating a gold-linked product designed to offer investors exposure to gold prices while providing downside protection. Shah recalled that a similar concept was suggested as early as 2005, which involved splitting investments between gold-linked options and government securities. The structure aimed to ensure that even if gold prices fell, the investor's principal amount remained protected, while still allowing participation in any price gains. Although regulatory barriers prevented this product from launching in the past, Shah suggested it could be re-evaluated under current market conditions.
This proposal arrives at a time when interest in gold-linked financial instruments has faced fluctuations. Data from the Association of Mutual Funds in India (AMFI) showed that net inflows into gold ETFs in July 2026 were Rs 1,559 crore, marking a decline of approximately 55% compared to the Rs 3,443 crore recorded in June 2026. This trend highlights the volatility in investor sentiment toward gold-backed financial products.
Shah also suggested the introduction of money market funds that offer a cheque-writing facility. He argued that such products would bridge the gap between bank accounts and market-linked returns, potentially attracting cash currently kept outside the formal financial system by offering both liquidity and yield.
Regarding the proposal for mutual funds dedicated to retail Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), the regulator highlighted practical challenges. SEBI Whole Time Member Amarjeet Singh noted that for such funds to be viable, the underlying REIT and InvIT markets must first achieve higher liquidity to ensure the safety of retail investors.
Investors looking at these proposals should monitor whether the regulator allows these new structures. While these products aim to offer more variety, the historical context of regulatory hurdles and the current volatility in gold ETF inflows suggest that the path to approval and market acceptance will depend on risk management and market readiness.