Gupta Equities Pvt. Ltd. (GEPL), a leading financial services company, is promoting Gold ETF (exchange traded fund), designed to give returns that closely correspond to returns provided by domestic prices of gold. Today the Indian market has merely 7 funds in this category (until March 2010). In the last 6 months 2 big fund houses namely HDFC & ICICI have introduced Gold ETF recently amongst the 10 fund houses existing in the market.
Rather than any other asset class, Indians traditionally, believe in investing gold. Across the globe, Central Bank’s are taking more exposure to Gold in their treasury due to the devaluation of the currency, which helped gold to delivered higher return.
In the past 3 years Gold had moved from Rs. 8000 to Rs. 20000 level by delivering 23% CAGR return to investor, hence, the Gold ETF market has seen an upward trend since its inception. When compared, the incremental inflow in last year average was nearly 83Crs, whereas in last 6 months the average inflow has been more than 2 folds which sums up to is around 200Crs (which includes 2 new fund offers). Gold ETF is a security listed on the stock exchange, through which investors can participate in the gold bullion market without the compulsion to take physical delivery of gold.
Currently Bank Fixed deposits are offering yearly return in the range of 7-8% while gold had delivered 20% return in last one year.
Gold ETFs are units representing physical gold, in dematerialized form. An investor can buy gold in units every month. Minimum subscription amount shall be Rs. 4, 000 and thereafter in multiples of Rs.2, 000 each where the minimum holding period is 12 Months. The product has a monthly investment option where investors can buy and sell through their demat account. The instrument gives security against the risk of impurity and theft of physical Gold.
On this occasion, Vivek Gupta said that, “We take immense pleasure in introducing ourselves as a broking house which offers diverse products not only in the equities but also in debt. Gold ETF as an SIP option is for those investors who are risk averse and have not invested in gold for more than 6 months.
With GSIP (Gold Systematic investment Plan), and a minimum of Rs 4000 per month an investor can buy close to 2gm gold/ month which is close to 24 gms or more in a year. We are looking at making Gold more accessible to our risk averse investors and believe that there is only one way and that is through Paper Gold.”