Gold ETFs Boom in India


"ETFs are relatively new in India, and will likely continue growing."

Indian investors are these days turning their investment appetite to a new area: Gold Exchange Traded Funds (ETFs).

ETFs are relatively new in India. And gold is the only commodity that has an exchange traded fund in the country. Gold ETFs are booming these days thanks to the surge in the yellow metal prices brought about by the commodities super cycle boom that is on worldwide.

In the last two months, the eight Indian Gold ETFs have performed better than stocks. Experts say Gold ETFs in the country have gained nearly 20 per cent in the last two months.

"People in India who have been buying physical gold all these years are turning their attention to Gold ETFs. Gold ETFs are good performers these days and more and more Indians are putting their money into these exchange traded funds," Arindam Gupta, a bullion analyst based in Mumbai said.

According to Prithviraj Kothari, Managing Director, Riddisiddhi Bullions Ltd (RSBL), Gold ETFs are doing extremely well in India.

"At present, only gold ETFs are offered for Indian investors, but that also has seen phenomenal growth during past few months. Volumes in gold ETFs are posting over 100% growth for past several months. This shows that awareness about retail investment products like ETFs is gaining momentum and we can expect further growth in it," Kothari said.

Spurred by the boom in gold prices led by the commodities rally, several Indian companies and mutual funds are chalking out plans to launch new Gold ETFs.

Experts say though India is the largest consumer and importer of gold in the world, the country's Gold ETF collection is very small compared to other countries.

But with the Gold ETF investments growing 100% year-on-year, the Indian gold ETF market will grow phenomenally in the coming years.

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