Indian Investors Jump into Gold ETFs


"Gold ETFs are witnessing a sharp spurt in volumes in India."

Mineweb, Shivom Seth

Gold exchange traded funds are witnessing a sharp spurt in volumes in India, with investors scurrying to pick up as many as they can lay their hands on. With over 30 mutual fund companies present in India, some 12 mutual fund houses have come up with gold ETFs. Investment awareness and the tremendous potential for gold investment in the form of ETFs is ensuring that companies line up many more in the next quarter.

Mumbai-based Benchmark Mutual Fund was the first to start a gold ETF in 2007 and reportedly has the largest collection. Analysts are pegging India's gold assets under managements through ETFs at 9,754 tonnes as of March 2011.

Traders insist that exchange traded funds (ETFs) dealing in gold have caught the fancy of Indian investors, typically due to the low cost and recent track record of decent returns. With sizeable returns of 22% in 2010, gold ETFs have gained over 6% in the first half of the year, they say.

"Amongst other funds, gold exchange traded funds have given the second best performance in just six months, and Indian investors are pumping in more money,'' said Rohan Chatterji, research analyst with a brokerage house here.

He pointed out that assets under management of gold ETFs had surged 58.3% by the end of June. "Several factors like the United States Federal Reserve's $600 billion bond buying programme and growing concern that Europe's debt crisis is worsening has strengthened the need for a safe asset,'' he added.

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