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Mutual funds’ gold bandwagon grows

business Updated: Mar 06, 2012 22:02 IST
Sachin Kumar
Sachin Kumar
Hindustan Times
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As gold prices continue to rise, more asset management companies (AMCs) that run mutual fund schemes have begun to launch gold-related plans.

Birla Sun Life Asset Management Company, the fourth-largest asset management firm in the country, has launched a gold fund and Motilal Oswal Asset Management Company has launched gold Exchange Traded Fund (ETF), while Canara Roboeco Asset Management Company is also planning to roll out gold ETF.

The yellow metal shined as an asset class in 2011 as its prices witnessed 32% rise in the calendar, outpacing other asset classes such as real estate, equities and debt instrument like banks fixed deposits.

Experts believe that despite the strong rally last year, gold prices will further go up in the coming years and hence will attract more investors.

“It’s not late for the investors who missed the rally last year, gold prices are expected to rise further in 3-4 years,” said Ritesh Jain, head investments, Canara Robeco AMC. “We may see a new high in gold prices in rupee term this year itself.”

New gold funds offers from Birla Sunlife AMC and Motilal AMC are open for subscription for investors. Gold ETFs are open-ended mutual fund schemes that invest the money collected from investors in gold and are designed to provide returns that would closely track the returns from physical gold in the spot market.

“The uncertainity surrounding the equity markets is still not over, which means that investors money will continue to come in gold,” said Nitin Rakesh, CEO, Motilal Oswal AMC. “Number of investors buying gold as an investment through ETF route is very less and this number is bound to increase going forward.”

Gold ETF from Motilal Oswal allows investors to take physical delivery in minimum 10 gram bars, which is a first for Indian markets. Birla Sun Life Gold Fund is an open-ended fund-of-fund scheme that invests in Birla Sun Life Gold ETF.

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