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Our Bureau

Mumbai, Dec. 4 The five listed gold exchange traded funds’ (Gold ETFs) return surged 9 per cent on the exchanges in November although their asset base and gold holdings declined.

The total gold holdings of the five ETFs as on November 30, 2008 had dropped to 5.55 tonnes, from 5.61 tonnes as on October 31, 2008. This works out to a marginal fall of 0.7 per cent in holdings.

The assets under management (AUM) dipped 7 per cent during November. On November 30, the total asset base of the five ETFs added up to Rs 683.86 crore as compared with Rs 736 crore on October 31, 2008. Reliance’s Gold ETF’s AUM dropped the most, as it fell close to 9 per cent.

The fall in AUM of the five ETFs is insignificant, said Mr Arvind Chari, Fund Manager-Fixed Income at Quantum Asset Management Company. The commodities head of a brokerage explained that investors were exiting across schemes in mutual funds, and ETFs too have seen a lot of outflow, which explains why the asset base of the ETFs has also shrunk.

While the asset base and the collections may have declined, the returns from the gold ETFs have surged by an average of 9 per cent in November. Benchmark’s Gold ETF has gained 9.4 per cent to Rs 1,271.85 as on November 28, 2008; Reliance Gold ETF was up 9.49 per cent at Rs 1247.35; Quantum Gold ETF was up 8.02 per cent at Rs 634.08, Kotak Gold ETF was up 9.11 per cent at Rs 1,272.93 and UTI’s Gold ETF was up 9.19 per cent at Rs 1,271.85.

Mr U.K. Sinha, Chairman and Managing Director of UTI Asset Management Company, said that gold as an asset class in the long-term is a good investment; investors are now seen looking at other avenues which are safer than equities at the moment.

Mr Chari said that the Indian investor is yet to completely understand what exactly an ETF is. “The concept of ETFs is still quite new for investors here. We are doing our best to make the investor aware of what gold ETFs are all about,” said Mr Chari.

More Stories on : Mutual Funds | Gold & Silver

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