Equity trading in India may have virtually come to a standstill thanks to the ongoing global economic meltdown. But amidst all the gloom, investors in India are reaping rich dividends from gold exchange traded funds (ETFs).
A leading Gold ETF in India—UTI Gold ETF—said on Monday that it has given a solid return of 36 per cent for investors in the last six months. “These may be times of recessionary trends and global economic downturn. But Gold ETFs are posting good returns in India for investors. Our Gold ETF has given a glittering 36% returns to investors,” UTI Mutual Fund Head of Products R Raja told reporters.
According to Raja, in the past one year, the gold ETF from UTI Mutual Fund gave a return of about 29 per cent.
He said with most of the asset classes giving negative returns, investment demand for gold is rising. “This fact is justified by increase in asset under management. Assets in such exchange-traded funds in February rose 1.8 per cent to Rs 781 c rore,” Raja said.
Returns on India’s five gold ETFs increased by 6 per cent during the month as the yellow metal touched a new high.
Launched in 2007, Gold ETFs in India are managed by five fund houses including Benchmark Asset Management, UTI Mutual Fund, Kotak Mahindra Mutual Fund, Reliance Capital Asset Management and Quantum Mutual Fund.
Though Gold collections under the ETFs are growing in India year on year, they remain negligible when compared to India’s imports of around 700 tonnes annually.
ETFs track the performance of a particular index; their base price is basically equivalent to the value of the index. ETFs are not limited to gold. There are ETFs of almost all metals and most-traded agro-commodities. Eg: Gold, silver, copper, wheat, corn, cotton etc. At present, in India gold is the only commodity ETF.
Analysts say those who made money from gold ETFs in the past few months also should thank Indian rupee. Because, rupee’s steady depreciation helped investors gain handsomely from gold ETFs. Over the past year, international gold prices have headed nowhere and are actually down by about 3 per cent. But the gains came from the rupee fall.
In India gold prices rose roughly 40 per cent the past year. Going forward, therefore, returns for Gold ETF investors will depend not only how global gold prices fare, but also on the direction of the rupee against the dollar.
Apart from Gold ETFs, Indian investors looking for gold-related investments have the option of global gold equity funds, which invest in the stocks of gold mining companies.
However, these funds, having been battered last year, have staged a sharp rebound since early December. Both DSP BlackRock World Gold Fund and AIG World Gold Fund have delivered a 35 per cent return from early December, tracking the simultaneous recovery in equity markets as well as gold prices.
As commodities and stocks fell in tandem, gold mining stocks were battered by investors, even as gold, in the commodity markets, held up fairly well as safe-haven demand continued to flow in.
However, gold mining stocks have staged a recovery since December as a more favourable environment emerged for equity markets in general, even as gold prices too climbed.
A leading Gold ETF in India—UTI Gold ETF—said on Monday that it has given a solid return of 36 per cent for investors in the last six months. “These may be times of recessionary trends and global economic downturn. But Gold ETFs are posting good returns in India for investors. Our Gold ETF has given a glittering 36% returns to investors,” UTI Mutual Fund Head of Products R Raja told reporters.
According to Raja, in the past one year, the gold ETF from UTI Mutual Fund gave a return of about 29 per cent.
He said with most of the asset classes giving negative returns, investment demand for gold is rising. “This fact is justified by increase in asset under management. Assets in such exchange-traded funds in February rose 1.8 per cent to Rs 781 c rore,” Raja said.
Returns on India’s five gold ETFs increased by 6 per cent during the month as the yellow metal touched a new high.
Launched in 2007, Gold ETFs in India are managed by five fund houses including Benchmark Asset Management, UTI Mutual Fund, Kotak Mahindra Mutual Fund, Reliance Capital Asset Management and Quantum Mutual Fund.
Though Gold collections under the ETFs are growing in India year on year, they remain negligible when compared to India’s imports of around 700 tonnes annually.
ETFs track the performance of a particular index; their base price is basically equivalent to the value of the index. ETFs are not limited to gold. There are ETFs of almost all metals and most-traded agro-commodities. Eg: Gold, silver, copper, wheat, corn, cotton etc. At present, in India gold is the only commodity ETF.
Analysts say those who made money from gold ETFs in the past few months also should thank Indian rupee. Because, rupee’s steady depreciation helped investors gain handsomely from gold ETFs. Over the past year, international gold prices have headed nowhere and are actually down by about 3 per cent. But the gains came from the rupee fall.
In India gold prices rose roughly 40 per cent the past year. Going forward, therefore, returns for Gold ETF investors will depend not only how global gold prices fare, but also on the direction of the rupee against the dollar.
Apart from Gold ETFs, Indian investors looking for gold-related investments have the option of global gold equity funds, which invest in the stocks of gold mining companies.
However, these funds, having been battered last year, have staged a sharp rebound since early December. Both DSP BlackRock World Gold Fund and AIG World Gold Fund have delivered a 35 per cent return from early December, tracking the simultaneous recovery in equity markets as well as gold prices.
As commodities and stocks fell in tandem, gold mining stocks were battered by investors, even as gold, in the commodity markets, held up fairly well as safe-haven demand continued to flow in.
However, gold mining stocks have staged a recovery since December as a more favourable environment emerged for equity markets in general, even as gold prices too climbed.
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