Mutual funds and commodity exchanges are exploring whether exchange traded funds (ETFs) can be expanded beyond gold and silver. Current regulations limit ETFs to these two precious metals, but discussions are now underway between the two sides regarding other commodities, especially copper, according to three people aware of the matter. The discussions are still at a very early stage, with the two sides deciding how such a plan could work, they added.
To be sure, offering ETFs based on commodities other than gold and silver would require approval from the Securities and Exchange Board of India (Sebi). The Association of Mutual Funds of India (AMFI) had recommended this to the markets regulator some time ago. but “nothing has been heard on that yet”, said a fourth person with direct knowledge of the matter.
The discussions come at a time when gold and silver ETFs have seen heightened demand from investors on the back of a historic surge in gold and silver prices. In calendar year 2025, gold ETFs saw net inflows of ₹42,690 crore versus ₹11,226 crore the previous year, according to AMFI, which does not have similar data for silver ETFs. Over the past year, gold prices are up 89%, silver 201%, and copper 51% on the Multi Commodity Exchange (MCX).
India’s total ETF market stands was worth about ₹10.9 trillion at the end of December 2025, of which 18% was from gold and silver, according to AMFI.
Storage and other hurdles
However experts said the current rules could make it difficult to create commodity ETFs other than the gold and silver, as they require these ETFs to be backed by the physical metal. This means asset management companies (AMCs) have to store gold or silver of the same value as the fund’s assets under management (AUM).
Experts highlighted that while the high value-to-weight ratio of gold and silver makes storage manageable, industrial metals such as copper are far bulkier and require significantly more warehouse space for the same investment value.
“Unlike gold and silver, which are fungible, globally standardised, and easy to store and audit, copper is bulky, stored in tonnes, and requires large warehousing capacity, making physical storage costly and operationally complex for fund managers,” said Naveen Mathur, director, commodities, currencies and GIFT IFSC, Anand Rathi Share and Stock Brokers Limited. Agricultural commodities have similar constraints around capacity and variations in quality that make storage unviable, Mathur added.
Anil Ghelani, head of passive investments at DSP Mutual Fund, said that for gold and silver, there is a framework with standard bar sizes and clearly defined quality and fineness norms, and that mutual funds can only hold such standardised bars, which makes ETFs of precious metals more feasible.
“However, such a framework does not exist for copper, where multiple categories and varying quality make pricing difficult. Further, the current prudent regulatory requirement to hold physical commodity to fully back the ETF would make it operationally very difficult to handle movement and storage of large volumes of physical copper,” Ghelani said.
Commodity derivatives route
Another option is for funds to buy exchange traded commodity derivatives (ETCDs) instead of physical metal. However, Sebi limits this to 30% of the total fund size, whether for gold ETFs or multi-asset schemes. Since a fund cannot yet be 100% invested in derivatives, the regulatory hurdle for industrial metal ETFs remains high.
“Things can be managed by using ETCDs for commodities apart from gold and silver, but only if the regulations permit,” said an official, who did not wish to be named.
Hemen Bhatia, executive director and CEO at Angel One AMC, said commodity ETFs are still a tiny part of global ETF markets at around 3-4%. Within that, gold and silver account for around 85% combined. “So, from an allocation perspective, a third commodity may not add value to the overall portfolio. But from a tactical perspective, more options may help,” Bhatia said.
Emails sent to Sebi, AMFI and MCX remained unanswered at the time of publishing.