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Tania Kishore Jaleel

Mumbai, Nov. 7 With the mutual fund industry facing redemption pressure, the gold holdings of the five listed gold exchange traded funds (ETFs) declined in October as there was profit booking by the large players.

As on October 31, 2008, the gold holdings by these ETFs were 5.61 tonnes, down from 5.86 tonnes as on September 30, 2008. This makes for a dip of 4.4 per cent.

The gold ETFs also posted a negative return of 9.6 per cent in October.

Until September the collections were continuously increasing.

This is the first month since the launch of gold ETFs when collections have seen a decrease.

“Though the collections have fallen, this is not a significant dip. The collections have reductions due to profit booking mainly by some large players,” said Mr Rajan Mehta, Executive Director of Benchmark Asset Management Company.

“The objective of the gold ETFs is to buy gold when the prices are falling, but the depreciating rupee has sort of halted the price fall of spot gold,” said Mr Amar Singh, Head of Commodities Research at Angel Broking.

The price of gold fell 11 per cent in October.

The assets under management (AUM) of the ETFs saw a marginal increase in October.

The total AUM of the ETFs increased 1.23 per cent to Rs 736 crore from Rs 727 crore. September saw the asset base of the gold ETFs rise 12 per cent.

The AUM of the mutual fund industry dipped more than 18 per cent to Rs 97,196 crore in October.

“We have seen investors exiting mutual funds across schemes. They are moving out of ETFs too. The confidence of the investors has reduced, they feel that the overall base of these fund houses is not strong,” said the commodities head at a broking firm.

More Stories on : Mutual Funds | Gold & Silver

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