India has always had a fetish for gold and gold jewellery but the craze is going beyond that. With gold prices easing, the craze for the yellow metal is not only pushing consumers into investing in gold and gold jewellery, but the demand for gold exchange traded funds (ETFs) has also increased in the country.
The data compiled by the National Stock Exchange (NSE) indicates that smaller towns in Gujarat and Kerala are increasingly investing in gold ETFs.With Akshaya Tritiya being celebrated on May 13, demand for gold and gold-linked products is set to peak especially as prices have fallen .
Last year, during Akshaya Tritiya, the exchange recorded a traded value of R608 crore in gold ETFs, which was 44% higher, compared to 2011, which stood at R423.05 crore.
“This time, too, we are witnessing a huge demand for gold ETFs especially as Akshaya Tritiya is next month, there has been an increasing demand not only from the metros but also from the smaller towns,” said a spokesperson at the NSE.
Mumbai already accounts for over 12% of the total investors in Gold ETF, the data revealed while Delhi, Kolkata and Chennai in the last couple of years have shown an increasing clamour for investing in gold ETFs.
Assets under management have seen a growth of 18% (year-on-year) from R9,886 crore in March last year toR11,648 crore in March 2013 as gold as an asset class has given a return of about 25-30% between May 2011 Akshaya Tritiya to April 2012 (on Akshaya Tritiya).
Gold ETFs are exchange traded funds that linked to the price of physical gold. Each unit of gold ETF allows the investor own 1gm of gold without physically owning it.